The Jetfuel Conspiracy

[skyaddict]

Nationalize the industry, make these greedy bastards work for us by taking away the private profit motive. All profits can then go into the treasury and be earmarked for subsidizing alternative energys.

Mexico, Saudi Arabia, Venezuela, and Russia have all done this, just to name a few. I'm not one for creating bigger government, but when Oil Companies take record profits( Largest profits in the history of ANY industry/company EVER) and the cost of energy drives the economy further into a recession this can be justified as a way to control it.

Each of the countries you list are, oil revenue aside, basket cases setting themselves up for a huge fall if the price of oil collapses as all bubbles eventually do. (Granted, peak oil will keep prices high, i..e we won't ever see cheap gas again, but the current price spike and windfall for those countries reflects a bubble).

And these countries are becoming more basket-case like, not less, as they rely more and more on oil and gas revenue to buy political favor from their populace. Their oil industries have become extremely inefficient, with production frome existing fields faltering and exploration and development of new fields suffering. This spikes oil prices yet again but means lower revenues down the line for these countries. Their other industrial sectors have whithered away- take away oila nd gas and Russia's economy has been contracting sharply, the complete opposite of oil importer China where its non-energy sectors are thriving.

Mexico and Canada make great comparisons. Canada has welcomed massive, open investment from the U.S. and the inflows and development of new oilfields are huge. Mexico with its nationalized industry has become a basketcase. Venezuela, the extreme case, is setting itself up for an economic collapse.

 

[Soverytired]

Great idea Comrade, next we re-write the Constitution and while we're at it, let's make sure no company makes a profit, put ALL profits into the general fund. I nominate this as the most ridiculous post in FI this month.

I second that nomination.

The surest way to destroy an industry is to nationalize it, no question. And with the oil industry, nationalization pretty much guarantees a net drop in production . . .not exactly what's needed.

Besides,the "evil" Exxon-Mobil is the biggest publicly owned corporation in the world, and they do a fantastic job getting the oil that is extremely challenging to retrieve.

10% net profits aren't "excessive" . . . I wonder how many chuckle heads would be screaming that the government should nationalize airlines if they could make 10% net profits?

 

[justthewife]

Each of the countries you list are, oil revenue aside, basket cases setting themselves up for a huge fall if the price of oil collapses as all bubbles eventually do. (Granted, peak oil will keep prices high, i..e we won't ever see cheap gas again, but the current price spike and windfall for those countries reflects a bubble).

And these countries are becoming more basket-case like, not less, as they rely more and more on oil and gas revenue to buy political favor from their populace. Their oil industries have become extremely inefficient, with production frome existing fields faltering and exploration and development of new fields suffering. This spikes oil prices yet again but means lower revenues down the line for these countries. Their other industrial sectors have whithered away- take away oila nd gas and Russia's economy has been contracting sharply, the complete opposite of oil importer China where its non-energy sectors are thriving.

Mexico and Canada make great comparisons. Canada has welcomed massive, open investment from the U.S. and the inflows and development of new oilfields are huge. Mexico with its nationalized industry has become a basketcase. Venezuela, the extreme case, is setting itself up for an economic collapse.

Um, maybe you should be a little more informed about Russia before you lump it in with Mexico and Venezuela. First of all, Putin has based economic spending on 27-dollar-a-barrel oil. Oil could fall quite a bit before impacting their economy. Second, if the other industries are "contracting" as you speak, why does Moscow have the world's largest number of billionaires? Obviously you haven't been to Russia to see what is going on, but they are modernizing factories and creating new economic areas of growth outside of oil. Their economy is absolutely NOT a house of cards, as they have many resources besides just oil- precious metals, iron, timber, etc...

The whole reason why the US and Britain are so anti-Putin/anti-Russia is because one of his first priorities when he came into office was to reduce/eliminate the number of foreign companies drilling in Russia. If your country has a national resource, shouldn't the profits go to benefit the people? Alaska does something like this with the permanent fund dividend, and no one calls them "comrade."

 

[lowecur]

Um, maybe you should be a little more informed about Russia before you lump it in with Mexico and Venezuela.

Russia is doing quite nicely, but to me the caveat is they are really a "police state" being run by the former KGB, and thus still have designs on military power and expansion that bankrupted them in the past. Time will tell, but they are doing very well at this point.

This from the CIA library (can we really believe their intelligence? )

imp:​

Russia ended 2007 with its ninth straight year of growth, averaging 7% annually since the financial crisis of 1998. Although high oil prices and a relatively cheap ruble initially drove this growth, since 2003 consumer demand and, more recently, investment have played a significant role. Over the last six years, fixed capital investments have averaged real gains greater than 10% per year and personal incomes have achieved real gains more than 12% per year. During this time, poverty has declined steadily and the middle class has continued to expand. Russia has also improved its international financial position since the 1998 financial crisis. The federal budget has run surpluses since 2001 and ended 2007 with a surplus of about 3% of GDP. Over the past several years, Russia has used its stabilization fund based on oil taxes to prepay all Soviet-era sovereign debt to Paris Club creditors and the IMF. Foreign debt is approximately one-third of GDP. The state component of foreign debt has declined, but commercial debt to foreigners has risen strongly. Oil export earnings have allowed Russia to increase its foreign reserves from $12 billion in 1999 to some $470 billion at yearend 2007, the third largest reserves in the world. During PUTIN's first administration, a number of important reforms were implemented in the areas of tax, banking, labor, and land codes. These achievements have raised business and investor confidence in Russia's economic prospects, with foreign direct investment rising from $14.6 billion in 2005 to approximately $45 billion in 2007. In 2007, Russia's GDP grew 7.6%, led by non-tradable services and goods for the domestic market, as opposed to oil or mineral extraction and exports. Rising inflation returned in the second half of 2007, driven largely by unsterilized capital inflows and by rising food costs, and approached 12% by year-end. In 2006, Russia signed a bilateral market access agreement with the US as a prelude to possible WTO entry, and its companies are involved in global merger and acquisition activity in the oil and gas, metals, and telecom sectors. Despite Russia's recent success, serious problems persist. Oil, natural gas, metals, and timber account for more than 80% of exports and 30% of government revenues, leaving the country vulnerable to swings in world commodity prices. Russia's manufacturing base is dilapidated and must be replaced or modernized if the country is to achieve broad-based economic growth. The banking system, while increasing consumer lending and growing at a high rate, is still small relative to the banking sectors of Russia's emerging market peers. Political uncertainties associated with this year's power transition, corruption, and lack of trust in institutions continue to dampen domestic and foreign investor sentiment. President PUTIN has granted more influence to forces within his government that desire to reassert state control over the economy. Russia has made little progress in building the rule of law, the bedrock of a modern market economy. The government has promised additional legislative amendments to make its intellectual property protection WTO-consistent, but enforcement remains problematic

 

[FlyFastLiveSlow]

Apparently you do not understand capitalism....or maybe you just don't believe in it.

I didn't say that they SHOULDN'T fly, I said they don't NEED to. Many don't. And honestly....capitalism has serious problems. Something at the beginning of the Constitution mentions "promoting the general welfare....". Capitalism doesn't do that.

 

[DashTrash400]

I didn't say that they SHOULDN'T fly, I said they don't NEED to. Many don't. And honestly....capitalism has serious problems. Something at the beginning of the Constitution mentions "promoting the general welfare....". Capitalism doesn't do that.

Hmm, smarter minds than mine would take serious exception to your understanding of capitalism, to say nothing of the US constitution.

Perhaps we can start with meaning of the word "promote." You mean it in the active sense, as in direct and intentional causation, and in that sense capitalism certainly does not promote "the general welfare" in that everyone involved is in it to make a buck for themselves, not to make life better for everyone else. If, however, you take "promote" in the context of unintentional or incidental causation - it, "rainfall and sunlight promote plant growth" - capitalism certainly does promote the general welfare, moreso than any other economic system. That Americans are more prosperous than the vast majority of the world and the US has been a very capitalist nation since its inception are not coincidences.

 

[JFReservist]

"Do not imagine, comrades, that leadership is a pleasure. On the contrary, it is a deep and heavy responsibility. No one believes more firmly than Comrade Napoleon that all animals are equal. He would be only too happy to let you make your decisions for yourselves. But sometimes you might make the wrong decisions, comrades, and then where should we be?" - Animal Farm

...should the market system fail

 

[jetwash]

Germany, a country that certainly loves cars, uses about 12 Barrels per capita per year, the US is closer to 25 bpy!

In Germany they are now paying over $8 /gal and in some other parts or Europe close to $9/gal.

If they are able to do it and still have a decent standard of living I am sure that we can. But we will have to change our wasteful use of gas.

Considering the latest reports are saying that in the next 4 years we will be at $7/gal. We will soon be thinking of the good old days of $4.50/ gal.

 

[FlyFastLiveSlow]

In Germany they are now paying over $8 /gal and in some other parts or Europe close to $9/gal.

Not a large increase in Euro pricing though. At least we have a strong dollar policy (Paulson) and this is just a short "slowdown", not a recession (GWB). What world do those people live on? They also get significantly higher average mileage than the American "cars" do.

 

[Smacktard]

Something at the beginning of the Constitution mentions "promoting the general welfare....". Capitalism doesn't do that.

Can you name a system of government that would be more 'effective' at promoting general welfare?