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2 US on
slippery oil slope By Michael
T Klare
The "curse" of oil wealth is a
well-known phenomenon in Third World petro-states
where millions of lives are wasted in poverty and
the environment is ravaged, while tiny elites rake
in the energy dollars and corruption rules the
land.
Recently, North America has been
repeatedly hailed as the planet's 21st-century
"new Saudi Arabia" for "tough energy" - deep-sea
oil, Canadian tar sands, and fracked oil and
natural gas. But here's a question no one
considers: Will the oil curse become as familiar
on this continent in the wake of a new American
energy rush as it is in Africa and elsewhere? Will
North America, that is, become not just the next
boom continent for energy bonanzas, but a new
energy Third World?
Once upon a time, the
giant US oil companies - Chevron, Exxon, Mobil,
and Texaco - got their start in North America,
launching an
oil boom that lasted a
century and made the US the planet's dominant
energy producer. But most of those companies have
long since turned elsewhere for new sources of
oil.
Eager to escape ever-stronger
environmental restrictions and dying oil fields at
home, the energy giants were naturally drawn to
the economically and environmentally wide-open
producing areas of the Middle East, Africa, and
Latin America - the Third World - where oil
deposits were plentiful, governments compliant,
and environmental regulations few or nonexistent.
Here, then, is the energy surprise of the
21st century: with operating conditions growing
increasingly difficult in the global South, the
major firms are now flocking back to North
America. To exploit previously neglected reserves
on this continent, however, Big Oil will have to
overcome a host of regulatory and environmental
obstacles. It will, in other words, have to use
its version of deep-pocket persuasion to convert
the United States into the functional equivalent
of a Third World petro-state.
Knowledgeable observers are already noting
the first telltale signs of the oil industry's
"Third-Worldification" of the United States.
Wilderness areas from which the oil companies were
once barred are being opened to energy
exploitation and other restraints on invasive
drilling operations are being dismantled.
Expectations are that, in the wake of the 2012
election season, environmental regulations will be
rolled back even further and other protected areas
made available for development. In the process, as
has so often been the case with Third World
petro-states, the rights and wellbeing of local
citizens will be trampled underfoot.
Welcome to the Third World of
energy Up until 1950, the United States
was the world's leading oil producer, the Saudi
Arabia of its day. In that year, the US produced
approximately 270 million tonnes of oil, or about
55% of the world's entire output. But with a
postwar recovery then in full swing, the world
needed a lot more energy while America's most
accessible oil fields - though still capable of
growth - were approaching their maximum
sustainable production levels. Net US crude oil
output reached a peak of about 9.2 million barrels
per day in 1970 and then went into decline (until
very recently).
This prompted the giant
oil firms, which had already developed significant
footholds in Indonesia, Iran, Saudi Arabia, and
Venezuela, to scour the global South in search of
new reserves to exploit - a saga told with great
gusto in Daniel Yergin's epic history of the oil
industry, The Prize. Particular attention
was devoted to the Persian Gulf region, where in
1948 a consortium of American companies - Chevron,
Exxon, Mobil, and Texaco - discovered the world's
largest oil field, Ghawar, in Saudi Arabia. By
1975, Third World countries were producing 58% of
the world's oil supply, while the US share had
dropped to 18%.
Environmental concerns
also drove this search for new reserves in the
global South. On January 28, 1969, a blowout at
Platform A of a Union Oil Company offshore field
in California's Santa Barbara Channel produced a
massive oil leak that covered much of the area and
laid waste to local wildlife. Coming at a time of
growing environmental consciousness, the spill
provoked an outpouring of public outrage, helping
to inspire the establishment of Earth Day, first
observed one year later.
Equally
important, it helped spur passage of various
legislative restraints on drilling activities,
including the National Environmental Policy Act of
1970, the Clean Water Act of 1972, and the Safe
Drinking Water Act of 1974. In addition, Congress
banned new drilling in waters off the Atlantic and
Pacific coasts and in the eastern Gulf of Mexico
near Florida.
During these years,
Washington also expanded areas designated as
wilderness or wildlife preserves, protecting them
from resource extraction. In 1952, for example,
President Eisenhower established the Arctic
National Wildlife Range and, in 1980, this remote
area of northeastern Alaska was redesignated by
Congress as the Arctic National Wildlife Refuge
(ANWR). Ever since the discovery of oil in the
adjacent Prudhoe Bay area, energy firms have been
clamoring for the right to drill in ANWR, only to
be blocked by one or another president or house of
congress.
For the most part, production in
Third World countries posed no such complications.
The Nigerian government, for example, has long
welcomed foreign investment in its onshore and
offshore oil fields, while showing little concern
over the despoliation of its southern coastline,
where oil company operations have produced a
massive environmental disaster. As Adam Nossiter
of the New York Times described the resulting
situation, "The Niger Delta, where the [petroleum]
wealth underground is out of all proportion with
the poverty on the surface, has endured the
equivalent of the Exxon Valdez spill every year
for 50 years by some estimates."
As
vividly laid out by Peter Maass in Crude
World, a similar pattern is evident in many
other Third World petro-states where anything goes
as compliant government officials - often the
recipients of hefty bribes or other oil-company
favors - regularly look the other way. The
companies, in turn, don't trouble themselves over
the human-rights abuses perpetrated by their
foreign government "partners" - many of them
dictators, warlords, or feudal potentates.
But times change. The Third World
increasingly isn't what it used to be. Many
countries in the global South are becoming more
protective of their environments, ever more
inclined to take ever larger cuts of the oil
wealth of their own countries, and ever more
inclined to punish foreign companies that abuse
their laws. In February 2011, for example, a judge
in the Ecuadorean Amazon town of Lago Agrio
ordered Chevron to pay $9 billion in damages for
environmental harm caused to the region in the
1970s by Texaco (which the company later
acquired).
Although the Ecuadorians are
unlikely to collect a single dollar from Chevron,
the case is indicative of the tougher regulatory
climate now facing these companies in the
developing world. More recently, in a case
resulting from an oil spill at an offshore field,
a judge in Brazil seized the passports of 17
employees of Chevron and US drilling-rig operator
Transocean, preventing them from leaving the
country.
In addition, production is on the
decline in some developing countries like
Indonesia and Gabon, while others have
nationalized their oil fields or narrowed the
space in which private international firms can
operate. During Hugo Chavez's presidency, for
example, Venezuela has forced all foreign firms to
award a majority stake in their operations to the
state oil company, Petroleos de Venezuela SA.
Similarly, the Brazilian government, under former
president Luiz Inacio Lula da Silva, instituted a
rule that all drilling operations in the new
"pre-salt" fields in the Atlantic Ocean - widely
believed to be the biggest oil discovery of the
21st century - be managed by the state-controlled
firm, Petroleo de Brasil (Petrobras).
Fracking our way to a toxic
planet Such pressures in the Third World
have forced the major US and European firms - BP,
Chevron, ConocoPhillips, ExxonMobil, Royal Dutch
Shell, and Total of France - to look elsewhere for
new sources of oil and natural gas. Unfortunately
for them, there aren't many places left in the
world that possess promising hydrocarbon reserves
and also welcome investment by private energy
giants. That's why some of the most attractive new
energy markets now lie in Canada and the United
States, or in the waters off their shores. As a
result, both are experiencing a remarkable uptick
in fresh investment from the major international
firms.
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