[rockdoc123]

$this->bbcode_second_pass_quote('', '-')- The oil industry is vastly over-compensated for its work
-- The nation can't afford to leave this immense amount of power in the hands of a few corporate chieftains
-- The stakes are too high to trust "the invisible hand" of free enterprise for a solutoin
-- The outflow of money from the U.S. to foreign countries is bankrupting the treasury and the economy
-- Our basic national security demands it

[tribalzendancer]

It seems like nationalizing the oil industry would be a poor utilization of time and energy.

Oil is on the way out anyway. We don't need to be continuing to pump oil out of the ground, as this only exacerbates the climate change problem.

Advocating a nationalized solar-energy project, or CSP that's heavily subsidized by the public, to the point that energy becomes free, would on the other hand, seem like a wise investment in energy and focus.

[Economix]

A brief note to RocDoc:

The debating points you so eagerly attack were preceded by a small phrase: "Supporters might say..." You omitted that portion of the text for some reason.

Again, these are not my positions. Rather, they are an invitation to a discussion. So I don't particularly appreciate your comments such as "what are you smoking..." Let's try to be honest here.

Also, as a Christian, I find the "crist sake" stuff to be really offensive. Let's focus on the topic at hand instead of name calling, if possible.

As Winston Churchill said: "Rather than raising your voice, why don't you reinforce your argument."

--------------------

My follow-up point in raising the question about nationalization is this (expressed differently above):

Do we need to nationalize the oil and gas industry in order to finance a large scale transition to new forms of energy?

I'd say the following in response to your comments:

1. If oil is peaking and on the way out, why do we need to provide massive incentives for private oil companies to find more of it? Isn't that circular logic? (There's no more, so we need to pay people to find more because there's no more.)

2. Is there some middle way between nationalization and private enterprise that would provide a source of funds for the multi-decade energy transition that is needed (e.g., a windfall profits tax on any funds not reinvested in exploration or refining, minus a reasonable rate of return for shareholders)?

3. Throughout U.S. history, true national emergencies almost always trump shareholder rights, whether it be specific government intervention on the supply side (WW II) or specific government intervention on the price side (e.g., Lincoln, Wilson, Roosevelt, Eisenhower, JFK and Nixon). Shareholder rights are ultimately at the mercy of the political system and greater historical context -- like it or not. Maybe that's good, maybe it's bad.

4. The proposal on the table mentions that shareholders would receive fair value for their investment. This is not an idea that would require a value grab by the government.

5. In terms of compensation, when the last CEO / Chairman of ExxonMobil retired, he received cash, stock and related benefits in the amount of about $400 million. For one person. I'd say that's pretty obscene and excessive by almost any reasonable measure. Maybe not by purist libertarian standards, but I'd guess that the vast majority of Americans would call it excessive.

So, again, is it time to nationalize the U.S. oil and gas industry? If not, how would we pay for a massive project to transition our society away from fossil fuels?

[Specop_007]

Throughout history social systems, or socialized nations, have not kept up with capitalistic nations as a whole. There are of course exceptions though. As a whole when a system is in place that does not offer tiered compensation based upon your assumed level of skill you have a general slide to the bottom. Why should I work to become one of the best in my field if I get paid as the most imcompetent in my field?

Simply put, money is a powerful motivator. Generally nationalization of something removes the one true reason an individual has for working hard.

Whether this is good or bad is up to the individual to decide.

[BigTex]

A brief note about Rockdoc to new folks:

Rockdoc doesn't post here as often as we would like, but he is an amazing resource when it comes to the nuts and bolts of the energy industry.

For those who would like to learn a lot about the energy business, read his old posts. It's good stuff.

Economix, you may want to swap out your thin skin for one of the newer models in the medium to thick range. They are better suited to this climate as well.

[jlw61]

From time to time I like to take the opposite side just to see if I can create a decent argument. As a Libertarian I oppose any form of government nationalization, but as an exercise I'll take a stab at it. So without getting verbose, I submit for your approval the following reasons as to why the government should do this.

[/gag reflex]

Reasons to Nationalize the Energy Industry

How:

• Using an eminent domain like justification and paying fair market value at time of take-over over a set period as listed in a previous post. This would be the most logical method.

Why:

• Unify all sectors (Oil, gas, electric, nuclear) into one entity to eliminate redundancy in the industries.
• Provide for better cooperation in exploration and recovery.
• It will streamline the building of new facilities and infrastructure.
• It will eliminate the need for state oversight.
• It will eliminate "Enron" type scams and profit motives providing for a fairer and more unified cost to customers in all 50 states.
• Provide a funding mechanism (increased taxes from sale of fuel replacing current profit margin) that would provide funding to revitalize infrastructures.
• Cost of all energy would reflect true funding requirements and help eliminate hidden costs.
• Carbon taxes could be quite easily calculated into the price.
• Easier to insulate industry from lawsuits.
• Easier to maintain oversight for pollution and standards.
• Provide a direct avenue for the people to make decisions via the vote.
• Provide a better face to the industry by eliminating the idea of "robber barons" and "evil corporations".
• Provide for a better response to national needs in time of crisis.
• Would provide more options to force states to impliment unfunded mandates.
• Provide better energy security.
• Because it needs to be done to guarantee the american lifestyle for future generations.

[BigTex]

jlw61, I enjoy doing the same thing--i.e., arguing both sides as best I can to understand the whole issue better.

There are undoubtedly some good national oil companies around the world. I am no expert, but Saudi Aramco seems to do a pretty good job of getting the oil to the surface.

The problem, to me, is not whether a government CAN run an oil company (though some probably do it better than others), but whether a government running an oil company is the BEST arrangement.

To me, the U.S. sort of has the best of both worlds. By having publicly traded companies make up most of the U.S. energy industry, any member of the public who would like to have a share of the earnings and profits of this industry may do so by purchasing the stock or bonds of these companies.

The government also participates in the industry through extensive regulation and oversight and by the confiscation of a portion of the companies' profits in the form of taxes.

So I think we may be a bit closer to collective ownership and control of the U.S. energy industry than it may at first appear.

[Nickel]

$this->bbcode_second_pass_quote('Economix', '2'). Is there some middle way between nationalization and private enterprise that would provide a source of funds for the multi-decade energy transition that is needed (e.g., a windfall profits tax on any funds not reinvested in exploration or refining, minus a reasonable rate of return for shareholders)?

[BigTex]

Can anyone point to a recent example where a country's energy industry was nationalized in which private property owners were fairly compensated and production increased following the takeover?

I assume that taxes in such a country would be cut following the nationalization, since the government coffers would now be the respository for the energy industry's profits.

I can't think of any. I'm sure there must be a few examples.

How about Venezuela? How has it gone down there?

What about the production and exploration currently done by the U.S. energy industry outside the U.S. borders? Would that be nationalized as well? On what basis?

That's private property that may be subject to the laws of another jurisdiction in which U.S. seizure laws are inapplicable. Would the U.S. maybe just threaten to attack that country unless it permitted the U.S. to seize those assets as well?

[Nickel]

$this->bbcode_second_pass_quote('Specop_007', 'S')imply put, money is a powerful motivator.

[Economix]

I like the way this discussion is going, in terms of depth and honesty. In response to Tex, here are some thoughts:

1. There is no single "monolithic" definition of nationalization in the 21st or late 20th century. Airbus, for example, is a pretty successful consortium of European aerospace firms that combines aspects of private industry with government ownership. Is it nationalized or not? That depends on your definition. Same goes for British Telecom and Rukoil and Deutche Telecom. This model emphasizes private business management with a large government ownership stake.


2. Aramco is the result of a quasi-nationalization process that falls into this basket.

3. The old 1950-1979 type of nationalization is less and less common. Countries really want the benefit of foreign expertise along with a bigger share of the revenue stream. That means pursuing a new hybrid model of ownership and management.

4. Hugo Chavez is attempting to nationalize what's left of foreign-owned oil fields, but it's mired in a huge court case. I think Chavez realizes that his heavy crude is not refinable in most locations, so he's reluctant to cut off the U.S. cold turkey.

5. The Chilean takeover of its copper mining industry was pretty darn successful over time, in terms of money and jobs.

My point isn't to blast capitalism, which I believe in, but rather to suggest that we are facing a true national (international?) emergency. To get through this storm, we're going to need a massive investment in economically feasible alternatives to petroleum. That will take money, talent and a type of national leadership that isn't available in the current corporate-run approach to energy management in the U.S. today.

I think today's ExxonMobile shareholder meeting (read the news postings) demonstrates that certain corporate boards and executives are incredibly narrow-minded about the dangers we now face -- and how to address them.

When they say: "It's our job to ensure the energy supply," I think they're really saying "We've got a good thing going for us and our shareholders, so please butt out."

No corporation that I've worked for every pretended to be a public service agency. Self-interest is a powerful motivator, but not always enough to change systemic problems or overcome massive structural obstacles.

In all of this debate, I find it useful to refer to economic history instead of just economic theory or partisan ideology.

For a good example, I'd suggest reading "The Great Transformation" by Karl Polanyi. It's available in paperback. One of the topics he addresses is the collapse of the 19th century liberal economic model from 1917-1945, which was replaced by a new model of economic integration.

We may be headed for another "Great Transformation" right now that would replace the current economic model.

Earlier this year, I visited Haiti. If you want a pure vision what happens when society, economy, environment, agriculture and government collapse, just take a trip to Port au Prince -- or the countryside of Haiti. It's a vision of political hell on Earth. Here's hoping we never get that far down the sink as we try to find new sources of energy.

[BigTex]

Economix, great post. Thanks.

[vision-master]

$this->bbcode_second_pass_quote('BigTex', 'E')conomix, great post. Thanks.

[Tyler_JC]

You use Aramco as an example of successful nationalization?

Good grief...

[Economix]

Tyler,

Saudi Aramco may not be a good example of nationalization from the standpoint of the U.S., but it's certainly been successful in terms of its basic business metrics:

-- It's the largest oil corporation in the world and the world's largest in terms of proven crude oil reserves and production

-- It operates the world's largest single hydrocarbon network, the Master Gas System.

-- It produces about 3.4 billion barrels of crude per year and manages over 100 oil and gas fields in Saudi Arabia alone

-- Aramco even has it's own financial system and fleet of ships

I'd say that's at least "moderately" successful, wouldn't you? If not, why not? (From the perspective of the Saudi government...)

[vision-master]

Manhattan Project

[Denny]

The U.S. government did nto nationalize the auto industry, it just limted them from the use of strategic materials required for the war effort top product consumer goods, whcih in turn forced them into bidding on defense work.

But, they were stil ownwed by their stock holders.

I think some model like that oculd be employed again, just think national emergency requring a massive rail and mass transit network to be built.

If you take the profit motive our of the economy, you'll end up like Russia of old. As one worker said under the Soviet regime: "They just pretend to pay us....but we get back at them...we just pretend to work!"

[rockdoc123]

$this->bbcode_second_pass_quote('', 'I')f oil is peaking and on the way out, why do we need to provide massive incentives for private oil companies to find more of it? Isn't that circular logic? (There's no more, so we need to pay people to find more because there's no more.)