Making Chevron Pay

by MARK WEISBROT

Environmentalists seem to realize that they have some stake in a fight such as the Ecuador-Chevron lawsuit.  In that case, which Chevron has recently moved to an international arbitration panel in an attempt to avoid a multi-billion penalty handed down by Ecuadorian courts, it is about whether a multinational oil corporation will have to pay damages for pollution, for which it is responsible.  Most environmentalists figure that would be a good thing.

But what about fights between multinational oil giants and the governments of oil-producing states, over control of resources?  Do people who care about the environment and climate change have a stake in these battles?  It appears that they do, but most have not yet noticed it.

In December of last year Exxon Mobil won a judgment against the government of Venezuela for assets that the government had nationalized in 2007.  The award was actually a victory for the government of Venezuela:  Exxon had sued for $12 billion, but won only $908 million.   After subtracting off $160 million the court said was owed to Venezuela, Exxon ended up with a $748 million judgment.  The ruling was made by an arbitration panel of the International Chamber of Commerce (ICC).  On February 15th, Venezuela paid Exxon $250 million and announced that the case was settled.

The case has been widely seen as extremely important among oil industry analysts although it didn’t get that much attention elsewhere.  Some background:  the dispute arose out of the Venezuelan government’s decision to take a majority stake in oil extraction, in accordance with its law.  In 2005 it entered into negotiations with foreign oil companies to purchase enough of their assets in order to achieve a majority stake.  Almost all of the negotiations with dozens of companies were successful, with only Exxon and ConocoPhillips going to arbitration (Conoco is still negotiating).

Exxon adopted a strategy of trying to make an example out of Venezuela, so that no government would try to mess with them.  They went to European courts to freeze $12 billion of Venezuelan assets, but this was reversed within a matter of weeks.  They also went to arbitration at the ICC and at the World Bank’s arbitration panel (ICSID) (the latter case is still pending). But the ICC gave them much less than the Venezuelan government had reportedly offered them in negotiations. The decision was noted intensely among oil industry specialists – and was seen by developing country governments as an important victory for the developing world —  but didn’t get much attention in the mass media.

This is a big precedent, and of course there are other countries that will continue to have disputes with oil companies over control of resources.  Why should environmentalists care?  Well for those of us who would like to slow the accumulation of greenhouse gases in the atmosphere, we would like to keep more oil in the ground. That is one reason why most environmentalists would support a carbon tax, which would raise the price of carbon emissions.   The main reason that Venezuela insisted on a majority share in these oil projects is that it wants to control production.  Venezuela is a member of OPEC, and abides by the organization’s quotas.  If you want to reduce climate disruption, then you have a big interest in whether governments that want to reduce oil production are able to do so.

A higher price of oil due to reduced production by oil-producing countries reduces oil consumption in the same way that a carbon tax does.  It also encourages the development of non-fossil fuel alternatives, including solar and wind technologies, which become more economically feasible at higher oil prices. (Of course, higher prices do encourage non-OPEC countries to produce more oil and OPEC members to cheat on the cartel, and a carbon tax would not have the same effect; but this would be an argument for a stronger and more inclusive OPEC.)

On the other side, our adversaries have always had the goal of flooding the world with cheap oil, which would of course greatly accelerate global warming.  Before Hugo Chávez was elected in Venezuela, the national oil company (PDVSA) shared that goal with Washington.  But as soon as he was elected, Chávez successfully pushed OPEC to reduce production, moving oil prices off their deep low point of $11 a barrel in 1998.  The U.S. State Department, in a 2002 report, admitted that the U.S. government “provided training, institution building, and other support to individuals and organizations understood to be actively involved” in themilitary coup that briefly overthrew Venezuela’s elected government that year.   That same report also stated that one of the main reasons for Washington’s “displeasure” with Chávez was “his involvement in the affairs of the Venezuelan oil company and the potential impact of that on oil prices.”

Of course it is not politically popular for anyone to appear as pro-OPEC in the rich, oil-consuming countries.  But most environmentalists are willing to support policies, such as a carbon tax, that are not necessarily going to win elections this year.  They should also recognize that they have a stake in the producing states’ struggle with multinational companies over control of fossil fuel and other natural resources.

Mark Weisbrot is an economist and co-director of the Center for Economic and Policy Research. He is co-author, with Dean Baker, of Social Security: the Phony Crisis.

This article originally appeared in The Guardian

Like What You’ve Read? Support CounterPunch
Weekend Edition
September 4-6, 2015
Lawrence Ware
No Refuge: the Specter of White Supremacy Still Haunts Black America
Paul Street
Bi-Polar Disorder: Obama’s Bait-and-Switch Environmental Politics
Vijay Prashad
Regime Change Refugees: On the Shores of Europe
Arun Gupta
Field Notes to Life During the Apocalypse
Steve Hendricks
Come Again? Second Thoughts on My Ashley Madison Affair
Paul Craig Roberts
Whither the Economy?
Ron Jacobs
Bernie Sanders’ Vision: As Myopic as Every Other Candidate or Not?
Jeffrey St. Clair
Arkansas Bloodsuckers: the Clintons, Prisoners and the Blood Trade
Richard W. Behan
Republican Fail, Advantage Sanders: the Indefensible Budget for Defense
Ted Rall
Call It By Its Name: Censorship
Susan Babbitt
“Swarms” Entering the UK? What We Can Still Learn About the Migrant Crisis From Che Guevara
Andrew Levine
Compassionate Conservatism: a Reconsideration and an Appreciation
Kali Akuno
Until We Win: Black Labor and Liberation in the Disposable Era
John Wight
Adrift Without Sanctuary: a Sick and Twisted Morality
Binoy Kampmark
Sieges in an Age of Austerity: Monitoring Julian Assange
Colin Todhunter
Europe’s Refugee Crisis and the Depraved Morality of David Cameron
JP Sottile
Chinese Military Parade Freak-Out
Kathleen Wallace
The Child Has a Name, They All Do
David Rosen
Why So Few Riots?
Norm Kent
The Rent Boy Raid: Homeland Security Should Monitor Our Borders Not Our Bedrooms
Michael Welton
Canada’s Arrogant Autocrat: the Rogue Politics of Stephen Harper
Patrick T. Hiller
There’s Nothing Collateral About a Toddler Washed Ashore
Ramzy Baroud
Palestine’s Crisis of Leadership: Did Abbas Destroy Palestinian Democracy?
Jim Connolly
Sniping at the Sandernistas: Left Perfectionism in the Belly of the Beast
Pepe Escobar
Say Hello to China’s New Toys
Sylvia C. Frain
Tiny Guam, Huge US Marine Base Expansions
Pete Dolack
Turning National Parks into Corporate Profit Centers
Ann Garrison
Africa’s Problem From Hell: Samantha Power
Dan Glazebrook
British Home Secretary Theresa May: Savior or Slaughterer of Black People?
Christopher Brauchli
Poor, Poor, Pitiful Citigroup
Norman Pollack
Paradigm of a Fascist Mindset: Nicholas Burns on Iran
Linn Washington Jr.
Critics of BlackLivesMatter# Practice Defiant Denial
Roger Annis
Canada’s Web of Lies Over Syrian Refugee Crisis
Chris Zinda
Constitutional Crisis in the Heart of Dixie
Rannie Amiri
Everything Stinks: Beirut Protests and Garbage Politics
Graham Peebles
Criminalizing Refugees
Missy Comley Beattie
In Order To Breathe
James McEnteer
Blast From the Past in Buenos Aires
Patrick Higgins
A Response to the “Cruise Missile Left”
Tom H. Hastings
Too Broke to Pay Attention
Edward Leer
Love, Betrayal, and Donuts
Cesar Chelala
Cruelty is Not a Human Right
Louis Proyect
Migrating Through Hell: Quemada-Diez’s “La Jaula de Oro”
Charles R. Larson
Class and Colonialism in British Cairo
September 03, 2015
Sal Rodriguez
How California Prison Hunger Strikes Sparked Solitary Confinement Reforms