FacebookTwitterGoogle+RedditEmail

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

Mark Weisbrot is co-director of the Center for Economic and Policy Research, in Washington, D.C. and president of Just Foreign Policy. He is also the author of  Failed: What the “Experts” Got Wrong About the Global Economy (Oxford University Press, 2015).

More articles by:
Weekend Edition
July 22, 2016
Friday - Sunday
Jeffrey St. Clair
Good as Goldman: Hillary and Wall Street
Joseph E. Lowndes
From Silent Majority to White-Hot Rage: Observations from Cleveland
Paul Street
Political Correctness: Handle with Care
Richard Moser
Actions Express Priorities: 40 Years of Failed Lesser Evil Voting
Eric Draitser
Hillary and Tim Kaine: a Match Made on Wall Street
Conn Hallinan
The Big Boom: Nukes And NATO
Ron Jacobs
Exacerbate the Split in the Ruling Class
Jill Stein
After US Airstrikes Kill 73 in Syria, It’s Time to End Military Assaults that Breed Terrorism
Jack Rasmus
Trump, Trade and Working Class Discontent
John Feffer
Could a Military Coup Happen Here?
Jeffrey St. Clair
Late Night, Wine-Soaked Thoughts on Trump’s Jeremiad
Andrew Levine
Vice Presidents: What Are They Good For?
Michael Lukas
Law, Order, and the Disciplining of Black Bodies at the Republican National Convention
Victor Grossman
Horror News, This Time From Munich
Margaret Kimberley
Gavin Long’s Last Words
Mark Weisbrot
Confidence and the Degradation of Brazil
Brian Cloughley
Boris Johnson: Britain’s Lying Buffoon
Lawrence Reichard
A Global Crossroad
Kevin Schwartz
Beyond 28 Pages: Saudi Arabia and the West
Charles Pierson
The Courage of Kalyn Chapman James
Michael Brenner
Terrorism Redux
Bruce Lerro
Being Inconvenienced While Minding My Own Business: Liberals and the Social Contract Theory of Violence
Mark Dunbar
The Politics of Jeremy Corbyn
David Swanson
Top 10 Reasons Why It’s Just Fine for U.S. to Blow Up Children
Binoy Kampmark
Laura Ingraham and Trumpism
Uri Avnery
The Great Rift
Nicholas Buccola
What’s the Matter with What Ted Said?
Aidan O'Brien
Thank Allah for Western Democracy, Despondency and Defeat
Joseph Natoli
The Politics of Crazy and Stupid
Sher Ali Khan
Empirocracy
Nauman Sadiq
A House Divided: Turkey’s Failed Coup Plot
Franklin Lamb
A Roadmap for Lebanon to Grant Civil Rights for Palestinian Refugees in Lebanon
Colin Todhunter
Power and the Bomb: Conducting International Relations with the Threat of Mass Murder
Michael Barker
UK Labour’s Rightwing Select Corporate Lobbyist to Oppose Jeremy Corbyn
Graham Peebles
Brexit, Trump and Lots of Anger
Anhvinh Doanvo
Civilian Deaths, Iraq, Syria, ISIS and Drones
Christopher Brauchli
Kansas and the Phantom Voters
Peter Lee
Gavin Long’s Manifesto and the Politics of “Terrorism”
Missy Comley Beattie
An Alarmingly Ignorant Fuck
Robert Koehler
Volatile America
Adam Vogal
Why Black Lives Matter To Me
Raouf Halaby
It Is Not Plagiarism, Y’all
Rev. Jeff Hood
Deliver Us From Babel
Frances Madeson
Juvenile Life Without Parole, Captured in ‘Natural Life’
Charles R. Larson
Review: Han Kang’s “The Vegetarian”
FacebookTwitterGoogle+RedditEmail