Fiori: only a corrupt and degraded elite hands over the oil.
"In this new world order of oil, only an elite that is entirely corrupt and degraded, from a moral standpoint, and completely imbecilic, from an intellectual standpoint, can relinquish state control of its already acquired national energy resources," says Professor José Luis Fiori.
247 - "In this new world order of oil, only an elite that is entirely corrupt and degraded, from a moral standpoint, and completely imbecilic, from an intellectual standpoint, can relinquish state control of its already acquired national energy resources," says Professor José Luis Fiori, in an article published by the Association of Petrobras Engineers (Aepet). See below:
The new world order of oil
by José Luís Fiori
In the last two decades of the 20th century, the Iran-Iraq War (1980-1988), the Gulf War (1990-1991), and the end of the USSR in 1991 severely impacted some of the world's largest oil producers and exporters, dividing and weakening OPEC and destroying Russian production capacity. It was a period of anarchy in the global oil market, occurring at the same time that large private oil corporations promoted a significant decentralization and "deverticalization" of their capital and strategies, while oil was transformed into a "financial asset" whose price was renegotiated daily on the New York and London stock exchanges. However, in the late 1990s and early 21st century, this trend was abruptly and radically reversed. And it all began, surprisingly, with the Anglo-American private oil companies themselves, which – starting in 1998 – led a new revolution in the private oil industry, engaging in a gigantic process of mergers of companies that were already the largest in the world, and which gave rise to the current Exxon-Mobil, ConocoPhillips, Chevron, BP, Total, or even the Norwegian StatoilHydro.
This initial earthquake soon took on new forms with the renationalization and reorganization of large Russian, Chinese, and Indian energy companies, along with the expansion of state-owned companies in Saudi Arabia and several other countries, including Brazil, especially after the discovery of deep-water oil in 2006. And a decisive step followed with new forms of intensive shale oil exploration, which repositioned the US among the world's three largest oil producers. This transformation was so rapid and profound that it led the leading American oil expert, Michael Klare, to assert that the world had entered a "new international energy order," characterized by the hyper-concentration of private oil capital, the proliferation of large state-owned oil companies, and the growing hegemony of economic nationalism and "energy nationalism" among the major powers of the world system, even among the so-called "liberal powers," including the United States under Donald Trump, the latest of the "converts." Indeed, 20 years after the beginning of this transformation, about two-thirds of the world's oil reserves are concentrated in the territory of 15 countries, and in 13 of them they are state-owned; of the 20 largest oil companies in the world, 15 are state-owned and control 80% of the world's reserves. The other five companies are private and control less than 15% of the world's oil supply. Therefore, Daniel Yergin – another great American expert – is absolutely right when he says that nowadays the main decisions regarding oil – from setting prices to outlining major strategies – are made by nation-states and their large public companies.
It is very difficult to identify a single cause that explains this revolution in the world oil order. But it is possible to at least highlight some fundamental upheavals that occurred simultaneously. On the economic level, the enormous growth of Asian countries, and in particular China and India, produced a real "demand shock" on the world oil market. On the other hand, on the geopolitical level, the almost continuous war in the Middle East, which has been ongoing since 2001, provoked a real "shock of negative expectations" in the world market, with the prospect of a permanent war involving the great powers and almost all countries inside and outside that region with large oil reserves. Finally, as a consequence of these events, the competition between the great powers intensified, and their struggle to conquer and monopolize the new resources discovered in this period, especially in Canada, Venezuela, and Brazil. Even so, looking more broadly, it can also be said that this new "oil order" is in fact a long-term product of the expansion of the capitalist interstate system that occurred in the second half of the 20th century. This is not just about the entry of China and India; it is about a system with 200 nation-states that are currently vying for an absolutely scarce, concentrated, and essential resource for their survival as national societies and economies, but also as sovereign territorial units participating in a relentless struggle for global power and wealth.
In this geopolitical context, and in this new world order of oil, only an elite that is entirely corrupt and degraded, from a moral standpoint, and completely imbecilic, from an intellectual standpoint, can relinquish state control of its already acquired national energy resources. July 2018
Note: This article was initially published in GEEP and is part of a series on international changes in recent years, analyzed from the perspective of the strategies of its main actors and their position within the main global geopolitical and geoeconomic arenas.
Note: José Luís Fiori is a permanent Professor in the Graduate Program in International Political Economy and in the Graduate Program in Bioethics and Applied Ethics at UFRJ; Coordinator of the CNPq/UFRJ Research Group, "Global Power and Geopolitics of Capitalism". www.poderglobal.net, and from the "Ethics and Global Power" Laboratory of the PPGBIOS; and consultant for GEEP-FUP.