Evo Morales new president of Bolivia

[techumseh]

Russia is very short of capital. It's infrastructure deficit alone is enormous. But not all countries are in this position. Some have their own sources of capital and technical expertise, eg. Saudi and Venezuela.

It may still make sense to do joint ventures in order to spread risk, keep abreast of current technology and to give "first world" corporations a stake, thereby lessening the chances of outside political interference.

[Colon™]

Russia has it own sources of capital, it's just that the Russia's legal environment is regarded as too insecure to invest it domestically, so you have a near constant capital flight.

[Az]

Russia has it own sources of capital, it's just that the Russia's legal environment is regarded as too insecure to invest it domestically, so you have a near constant capital flight.

Further nationalization will prevent this

[child of Thor]

You dont see many leaders do this kind of thing

http://news.bbc.co.uk/1/hi/world/americas/4563356.stm

good luck to him i'm thinking

[techumseh]

Yeah, it's a great start. I think his first foreign visit, to Cuba, signals he's not from the Lula mold, but will align himself with Castro and Chavez. It'll drive the US crazy. While they're bogged down in a costly adventure in Iraq, they're losing control in their own backyard.

[Az]

that's the least I am concerned about. actually lower wages will leave the upper ranks more prone to corruption.

[Dinner]

Originally posted by chegitz guevara

Cuz, God knows, the efficiency of a corporation is more importnat than the welfare of the people.

Che, you can tax companies and then spend the money on social wellfare programs without nationalizing the company, replacing technicrats with political appointees (A la Brown at FEMA), or forcing it to higher unnecissary workers. That just results in a sick company which doesn't produce profits and thus you end up hurting or killing the goose which is laying the golden eggs.

[Dinner]

Originally posted by chegitz guevara

Originally posted by VetLegion
Venezuela's oil production also slumped after nationalization.

What years was that? Citgo's been owned by Venezuela forever! After Chavez's election, production slumped because the anti-Chavez managers and union leaders (who no longer have a union to lead) shut down the plants.

There are plenty of companies willing to do business with Bolivia even if it nationalizes its fuel fields.

Morales biggest problem is whether or not the SE will try and secede no that they no longer have apartheid like control over the whole country.

Che, Venezuela's yearly production has been falling for 10 years now so it isn't just the strike in 2003.

http://www.signonsandiego.com/uniontrib/20050125/news_1b25oil.html

In the late 1990's daily production fell from 3.5 million barrels per day to 2.7 million barrels per day then fell off a cliff during the strike 2003 (the daily average for 2003 was 1.39 mbpd) but have sense stablized at 2.6 mbpd in 2004 though it looks like it will again slide in 2005. Importantly more and more of that oil is heavy oil (worth less and costs more to recover) instead of the light sweet crude oil refineries like best.

Production of existing wells can be brought back up using water or steam injection, however, to do it in a cost effective way you have to create highly detailed 3D models of the reservior and how the hydrocarbons migrate with in that reservior. Guess which foreign companies have invested big and have not only the best computer models but also vastly more sensitive refractive imagery equipment and ground penitrating radar. The foreign multinational oil companies.

It isn't just magic or some conspiracy that these multinationals have the advanced technology. They've invested big time into R&D in order to invent or improve these technologies while most of the nationalized companies haven't; largely because when faced with windfall profits the politicians would rather buy votes and hand out welfare or increase social spending instead of reinvesting it into the company which originally generated the profits. The politicians have different goals so they tend to make very poor owners and managers from the company's standpoint thus the multinationals always seem to have more invested in R&D and always seem to be ahead. Chavez's "reforms" have diverted yet more funds out of R&D and business development for the national oil company so production is falling and they're having a very hard time replacing the lost production or even squeezing the most out of their existing fields.

[techumseh]

Originally posted by Oerdin


Che, Venezuela's yearly production has been falling for 10 years now so it isn't just the strike in 2003.

http://www.signonsandiego.com/uniontrib/20050125/news_1b25oil.html

In the late 1990's daily production fell from 3.5 million barrels per day to 2.7 million barrels per day then fell off a cliff during the strike 2003 (the daily average for 2003 was 1.39 mbpd) but have sense stablized at 2.6 mbpd in 2004 though it looks like it will again slide in 2005. Importantly more and more of that oil is heavy oil (worth less and costs more to recover) instead of the light sweet crude oil refineries like best.

Production of existing wells can be brought back up using water or steam injection, however, to do it in a cost effective way you have to create highly detailed 3D models of the reservior and how the hydrocarbons migrate with in that reservior. Guess which foreign companies have invested big and have not only the best computer models but also vastly more sensitive refractive imagery equipment and ground penitrating radar. The foreign multinational oil companies.

It isn't just magic or some conspiracy that these multinationals have the advanced technology. They've invested big time into R&D in order to invent or improve these technologies while most of the nationalized companies haven't; largely because when faced with windfall profits the politicians would rather buy votes and hand out welfare or increase social spending instead of reinvesting it into the company which originally generated the profits. The politicians have different goals so they tend to make very poor owners and managers from the company's standpoint thus the multinationals always seem to have more invested in R&D and always seem to be ahead. Chavez's "reforms" have diverted yet more funds out of R&D and business development for the national oil company so production is falling and they're having a very hard time replacing the lost production or even squeezing the most out of their existing fields.

Oerdin, none of your premises are supported by your source. According to the link (a newspaper article nearly a year old) new exploration and development contracts with American and European oil companies have been put on hold due to the Chavez government's reassesment of their value to Venezuela and because it wishes to broaden it's cusomer base to include China and other countries. It also states that restricting exploration and production is in the interests of Venezuela, since it would result in a rise in the price of oil. All of these thing seem to be in the best interests of Venezuela and it's people, as does the increase in royalty rates.

Nowhere does your source support the notion that "Chavez's reforms have diverted yet more funds out of R&D and business development for the national oil company so production is falling and they're having a very hard time replacing the lost production or even squeezing the most out of their existing fields." If you have proof that Chavez has cut investment in R&D and business development, rather than simply raised royalty rates to a reasonable level, I'd love to see it.

You seem to think that maximizing the production of a valuable, yet finite resource by minimizing the return to the people of Venezuela is somehow a good thing. If that's what you call efficiency, then I'm glad that Chavez has other ideas.

[Dinner]

Where do you think Chavez is getting the money for social programs? Do you think he is pulling it out of thin air? The state oil company is bankrolling them since he's diverting funds to those uses.

Great since it is helping help, however, the question was why was production falling. The anwser is because the funds needed to invest in the latest technology and develop new fields (or squeeze more production out of old fields) is being spent else where. It's simple economics.

The question was how to keep the national petroluem company producing the maximium amount of money and why do nationalized companies need to constantly get technology transfers from the first world companies. Venezuela illistrates the reason well. The politicians have different goals and in the long run their control over the company is bad for the company's future. A better way to develop, a more sustainable way to develop is to do exactly what all of the developed nations have done. Create the rule of law, protect private property, and encourage private investment through good policies. Want to see good leftist leaders who do that and still expand social programs (mostly by concentrating on the fundimentals of education, infastructure, and living with in their means) then look at Brazil or Uraguay. Want to see bad leftist leaders who break those rules and end up making their people worse off in the long run? Look at Venezuela and Cuba.

[Dinner]

Under Chavez, the state oil company Petroleos de Venezuela SA spent more than $3.7-billion last year on social and agricultural programs, housing and other projects - about a third of its earnings.

Chavez has promised to keep up the spending.

The state oil company is paying to build medical clinics and support government "missions," ranging from adult education programs to state-run markets. The government says oil money helped build 15,000 homes for the poor in 2004, and 120,000 more are planned.

Across the country, oil proceeds are flowing to about 130 centers with agricultural and industrial cooperatives. One center, built at an abandoned fuel depot in Caracas, has a sign over the gate that reads, "Venezuela: Now It Belongs to Everyone." It includes a farming cooperative, shoe factory and textile plant.

Chavez's opponents say that while they favor helping the poor, the president is spending too much from an unstable source.

"Petroleos de Venezuela, after paying its taxes to the government, should reinvest its earnings," said Humberto Calderon Berti, a former oil minister. "The volume of production is falling," he said, and with it the amount of money generated for society.

Before Chavez, the state oil company never directly funded social programs but rather paid taxes to the government, which doled out some funds.

http://www.sptimes.com/2005/05/08/Worldandnation/Venezuela_s_oil_wealt.shtml

It is nice to help the poor and the government should fund social services (with in its ability to pay for said services), however, Chavez has now removed most of the professional managers and packed the company with political cronies. He's now squeezing most of the profits, even after tax profits (and the corporate tax rate in Venezula is EXTREMELY high in the oil sector; topping 50% of GROSS REVENUE not profits), out of the company in order to pay for his small scale worker co-operatives and increased social programs.

The problem with small scale worker co-operatives is most of them are to small to compete without state help, produce low quality goods, and don't have knowledgable managers who know how to run a business. More then likely the majority of these are going to only survive as long as there are government handouts to keep them afloat. Mao tried these small worker co-operatives during his great leap forward and he declared that every peasant should have an iron forge near his home in order to increase national iron production. The problem was it was extremely ineffienct and most of the iron produced was of such poor quality that it had to either be thrown away or reworked a half dozen times before it became useful. These majority rule co-ops haven't worked well in China, Yugoslavia, or Albania and they aren't likely to lead to long term growth as high as encouraging private companies is likely to produce.

the next problem with these nationalizations and collectivizations is that it leads to capital flight and virtually stops business investment (foreign or otherwise). Chavez's main targets for nationalization have been either foreigners (who don't get a vote) or his political rivals (who he wants to destroy). Chavez nationalized most of the media since it was critical of him (the newly nationalized state media daily sing praises to him; big surprise ) or cowed the few remaining nonstate controlled media outlets into following his censorship guidelines. Land nationalization and redistribution has been another dismal failure. He's targeted foreign owned cattle ranches and the properities owned by his rivals for nationalization claiming that it wasn't used. That claim is totally bunk since no one deliberately keeps land unused since they must continue to pay property taxes on it no matter if it is used or not. Instead the government has targeted things like cattle ranches claiming there weren't enough heads of cattle on them and saying he was robbing from the rich to give to the poor. Of course only the poor who happen to support Chavez ever get land and (as typically happens in such nationalizations) agricultural production has fallen while exports have fallen sharpest of all. That has literally kicked the legs out of one of the largest nonoil parts of Venezuela's economy and now the nation is more dependent upon oil revenue then ever before. That's a pity because oil production just keeps on falling.

[Dinner]

With 50% of Venezuela's National revenue tied to the state oil company it is simply foolish to run it into the ground this way. Especially since Chavez has done so poorly at managing the nation's nonoil economy.

[Barnabas]

who would you say is wasting the oil resources more? Venezuela or Saudi Arabia?

[Dinner]

Both are extremely wasteful, however, Saudi Arabia has 3-4 times as many resources to waste.

[pchang]

I think 3 - 4 is an understatement.