Sunday, May 25, 2008

Ecuador's Struggle over Oil

All populist leaders of oil states in the South face this dilemma: how to increase investment in oil and acquire the latest production technology while fighting with private oil companies over control of oil and share of oil profit.

Ecuador is a case in point: Alonso Soto, "Ecuador Offers Oil Firms Tax Cut to Keep Output Up," Reuters, 16 May 2008; "Ecuador Offers to Buy Out Oil Companies," Associated Press, 17 May 2008; "Ecuador's State Oil Company President Resigns," Associated Press, 20 May 2008; Alexandra Valencia, Saul Hudson, and Matthew Lewis, "Ecuador Names Admiral to Head State Oil Company," Reuters 22 May 2008; "OPEC to Support Ecuador Oil Industry," 26 May 2008.

"Peak oil" theory distracts us from this political problem by getting us to think that any decline in production is a matter of natural limits.

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