USNOC

A couple of other nutbags thought of this back in the summer of 2008, when ideas about lifting off-shore oil drilling bans were in the news and oil prices were going nowhere but up. I’m talking about a United States National Oil Company, something to compete on a more level playing field with the Chinese, Russians and Brazilians.

Fears over Chávez threaten oil auction

Others argued that even if private companies shy away, national oil groups from countries such as China and Russia remain committed.

A representative in Caracas of one of the state oil companies bidding said in spite of the high costs involved, national energy security is the overriding consideration.

Fast forward to oil approaching $100/barrel and BHO begins to roll out “his” USNOC plan. Finally a nationalization we can get behind? If nothing else it will get us to the bottom quicker (no pun intended).

Hey look at this, more oil in the news…

Why Oil Still Has a Future

By Yergin (who is just as credible as anyone else, these days, in my book)

Lockerbie bomber ‘set free for oil’

This is where I’m supposed to say something like the sun never sets on the British Empire yadda yadda… better luck next time.

19 Replies to “USNOC”

  1. I sure hope they come up with something better than “WMD” this time. The US majors can afford to hire Xe to do the wet work.

  2. Bunn, what’s the difference between the ExxonMobile, Chevron, Shell, Conoco-Phillips, etc. group and a National Oil company? Would the players be any different? Or the plays?

    I guess I’m not following the logic here. The USA has been dominating this game for so long it seems to me that oil “free enterprise” is one of the best and longest running examples of USA fascist behavior, as in government-private corporate collusion, on the global scale.

    I think this is backwards. It’s the other countries that are using our example, we just don’t call it what it really is.

    Probably the finance sector followed the earlier oil company example. Only they messed it up (too greedy and ignorant) and continue to do so, with the government trying to rescue a now hopeless situation.

  3. Sure they might be using “our example” to create a national company engaged in the business of pulling oil out of the earth, but that’s where the similarities end.

    As I understand it, for starters, these National Oil Companies are geographic monopolies and they don’t have to worry about pleasing shareholders. These things matter.

    Maybe the amount of collusion wouldn’t change much, and generally the same players would end up landing in the new entity, but the history of free market competition between the majors has done a lot to improve oil extraction technologies and the resulting know how. Bif probably has something to say about this.

    In the face of NOCs consistently outflanking the majors in recent years and appearing to only get better and better at it, what’s to stop the majors from withering and dying at some point? The helping government-interventionist hand of BHO (or some successor of his), that’s what will step in to “save” this industry, but probably too late to muscle into the most lucrative projects (absent other influencing factors).

    I just don’t see the government allowing these companies to fail, or to fall into the hands of foreign owners with controlling interests. Recent history bears this out. Repeat after me: Energy Security.

  4. [This is from 2006, but it’s probably still accurate. Yes, collusion on a global scale indeed!]

    http://www.oycf.org/oycfold/httpdocs/Perspectives2/34_09302006/4_ChenShaoFeng_OilPricinginChina.pdf

    “However, the SOCs have three relief valves to cushion the pressures from the MOCs. Above all, Chinese accession to the WTO has excluded the onshore upstream from fully opening to foreign investors, which implies that it is still up to the Chinese side to decide whether and how to open the onshore oil exploration and exploitation business in the future. Yet confined by the capital and know-how constraints, the Chinese government would maintain the open-up policy in this sphere. The second valve provided by the Chinese government is to allow the SOCs to aggressively preempt domestic retail stations before the market openness deadlines. Both Sinopec and CNPC set their targets to capture 60 percent and 30 percent of domestic retail market shares by 2005. And the last valve the SOCs resort to is to vigorously adopt the “go out” strategy, aiming to securing more equity oil and expanding foreign market. In all, competition is set to be more intense in the future Chinese market.”

  5. [From Petroleum Economist, August 2009]

    “SOME NATIONAL oil companies (NOCs) might have lost influence since last year’s oil-price collapse. Not China’s, which are in the midst of a global expansion.

    With over $2 trillion in foreign reserves and a sovereign wealth fund worth an estimated $200bn, China has extended loans designed to boost its access to reserves and taken advantage of lower share prices to make numerous equity acquisitions in oil and gas projects. Its expanding state-owned energy companies are also prepared to bid for outright ownership of foreign firms.”

  6. I think in the 50s and 60s the kings, princes and dictators sent their kids to Harvard, Stanford, and Oxford, and when they returned home to their countries they told their father’s, “don’t let the infidels push you around anymore, we can do this ourselves”. Something like that.

  7. No, no, no, Bif! It was the aura of Anglosphere fascism that prevented them from learning. Try to be more sensitive.

    Say, did anyone read Jim’s Aug. 31st column? Homey, I think he secretly digs L.A. I’m going to laugh the rest of the day thinking about Jim “The Marmot” Kunstler walking down a nearly-deserted Melrose with the sun beating down on his bald head. Maybe he wore a hat, but that’s not the point. People who live in hot climates — if they can avoid it — DON’T go outside in the afternoon to shop for clothes during the hottest part of the summer, fer Chrisakes!$! Palm Springs mostly shuts down in August. Think about how Europeans deal with the summer. As long as I can remember, half the shops on Melrose have been going out of business year round. You have to have either lived here or spent some significant amount of time in the Ole Shit Magnet to fully appreciate the references. JHK, thanks for the field report. I have always thought that Jim’s best and freshest work flows from his first-hand observations of different towns, cities, etc.

    I need a nap now, but later on I’ll go read Nudge’s post.

  8. A short and interesting piece re: the Carter Doctrine and Afghanistan.

    http://amconmag.com/article/2009/oct/01/00018/

    But it seems incomplete. (Short isn’t always better, unless it’s the concise rather than incomplete variety.)

    Oh yeah… the author forgot to talk about Paki nukes. The ancillary WMD fly in the ointment, I guess.

    The LibHawks are on the march. If I were at all political, I would be pompously glorifying Cindy Sheehan right now. DNC dupe or no, she doesn’t get much press these days, compared to when Bush was in office, anyway. The wars haven’t gone away. What gives?

    My next door neighbor is getting shipped off to Afghanistan for a year. I hope to see him again at his Welcome Home Party.

  9. no, the soviet politboro had it it right; you can’t be an empire and not be an empire at the same time.

    the author might want to ask himself some questions: why does the us need me resources? to maintain hedgemon status? what is the role of a hedgemon? what is the role of a vassal? i think there’s kind of a circular logic involved that’s unavoidable. he, the author, seems to think that the $ will retain some “value” and that resources will continue to flow in this direction without this maintainence of empire. kinda block headed if you ask me.

    of course all this will fall apart. i think the archdruid said it best when he said something like: entropy gets no respect.

  10. The way I see it, you can deny being an empire and still fail at being one. And you can be accused of being one and secretly aspire to it.

    No but seriously, dave, you’re spot on. Any kind of real power is mostly about being able, one way or another, to manage the flow of resources, which requires maintaining enough “stability” to prevent the even greater amount of chaos that would result from an unpoliced Middle East and Indian subcontinent from doing even more of the things that chaos does.

  11. “Sure they might be using “our example” to create a national company engaged in the business of pulling oil out of the earth, but that’s where the similarities end.”

    Bullshit! See below.

    “As I understand it, for starters, these National Oil Companies are geographic monopolies and they don’t have to worry about pleasing shareholders. These things matter.”

    No, they don’t matter. It is a game with rules set by those who first started playing it.

    “Maybe the amount of collusion wouldn’t change much, and generally the same players would end up landing in the new entity, but the history of free market competition between the majors has done a lot to improve oil extraction technologies and the resulting know how. Bif probably has something to say about this.”

    Ha ha ha. Oil extraction technologies have improved in spite of free market competition, not because of it. Aren’t you a patent attorney? Those companies fight like hell to keep IP confidential.

    “In the face of NOCs consistently outflanking the majors in recent years and appearing to only get better and better at it, what’s to stop the majors from withering and dying at some point? The helping government-interventionist hand of BHO (or some successor of his), that’s what will step in to “save” this industry, but probably too late to muscle into the most lucrative projects (absent other influencing factors).”

    Yes, the rules got changed on the US “national” oil companies. According to free market capitalism rules, those companies could and probably should die, if not competitive! What you seem to be asking for is MORE government collusion, not less. Sure, that’s a change, of sorts, and it might work, dunno.

    “I just don’t see the government allowing these companies to fail, or to fall into the hands of foreign owners with controlling interests. Recent history bears this out. Repeat after me: Energy Security”

    Silly rabbit, of course you’re correct, and before we see any of these bad things you mention happen, we’ll use our government’s formidable military to intervene and stop all such nonsense, perhaps risking the start of WWIII.

  12. Oh, so now you’re an IP attorney (if you’re talking about trade secret protection, it is — in some respects — the very antithesis of patent protection) and also think that communist-style central planning does a better of job of fostering and incentivizing innovation than the lure of marketplace profits. Yeah, keep talking. Don’t worry. The truth will bubble forth some day and your moment of glory and vindication will arrive then. Can I come to the party?

    When you say rules of this game “set by those who first started playing it”, I guess you’re suggesting prior massive collusion between the US “national” oil companies and US govt. Well then this would naturally suggest a sharing of information and technology now wouldn’t it? Oh, but you’re saying the rules got changed. Well, we do know that available resources got changed. We can probably agree on that much.

    I’m not asking for anything.

    Yes, that’s exactly right… a USNOC would be the definition of govt collusion.

  13. Well, as you probably know, the best kept IP is trade secrets, like the formulas for Coca Cola or Bush’s Baked Beans (psst….talk to the dog). I’m not a lawyer, as you know, but I pay some of them lots of money to keep my IP safe.

    What we all have to remember in the OCED countries is the majority of the oil that remains on this planet does not belong to us, even if we (the US National Oil Companies) were instrumental in finding and initially developing the fields.

    Ultimately, we are going to have to live very differently. We might as well start doing this soon, as we will have to do so eventually. This is what JHK keeps saying, if you can cut through all the other BS he tosses around.

  14. JHK’s latest. He’s as lost as anyone, wonder if he knows it. The comments section is no longer something I can even wade through to get the good bits out any more. No good bits.

    We are on the roller coaster, locked in, at the top, waiting for the fall, not knowing if the rickety wooden structure can sustain another drop. These debates. What does it matter?

    Just wondering at the end of a labor day weekend. Do you know the origins of Labor day?

    Labor Day
    http://blogs.ajc.com/cynthia-tucker/2009/09/04/remember-the-socialist-origins-of-labor-day/?cxntfid=blogs_cynthia_tucker

    Government account with missing details:
    http://www.dol.gov/OPA/ABOUTDOL/LABORDAY.HTM

  15. I say yes and no on majors hording technology. Although they compete fiercely on one level, they also cooperate, pool resources, share technology and (perhaps most importantly) share risk on other levels. They jointly participate in developing methods and technologies, spreading cost and minimizing risk.

    A lot of big developments are done, and technology deployed, by consortiums of companies, often involving oil companies, contractors and experts from several continents. They have proprietary technologies and methods themselves individually, sure, but a lot of the high-end technology, expertise and services are provided by third parties. Those high-end third parties (exploration, drilling, engineering, oilfield services, pipeline outfits and vendors of all kinds, etc.) are for hire in the global marketplace.

    Much of the investment and know-how is oblivious to boundaries or national loyalty because it’s a global business in a global market. More than technology, the big oil companies are sophisticated and just know how to get the job done.

    Most NOCs are just home-cooked entities in exporting countries who want to keep the spoils within the family as much as possible. We and China are oddballs because we would be the big importer NOCs I guess. They have a lot of cash and can call themselves whatever they want. But here at USNOC, our pockets are not bulging, we’d have to sell ourselves as value-added. Cash is king, but “value-added” might involve some attractive and interesting menu choices. For a little while anyway.

    Then there’s Europe and the North Sea boys (Shell, BP, etc.) And throw in Total and Eni. They have a lot of high tech and sophistication, but, you know, no cash eventually over there either. Hey, they could be the EUNOC (heh heh).

  16. “They have a lot of cash and can call themselves whatever they want.”

    We, formerly CNOOC, are pleased to announce the renaming of our glorious state-owned corporate self as China National But Really International Know How Buying Capitalism Loving Oil Extracting Deep Pocketed Most Trusted Friend To Round Eye Consumers Whose Currency We Proudly Hold But Seek To Trade Imminently For Any And All Natural Resources That Wondrous and Sophisticated Free Markets Make Available For Purchasing Under Transactional Circumstances Unquestionably Transparent.

    Should we run it by marketing first, before issuing the press release?

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