International oil companies like Oxy Petroleum have the know how to drill for oil. The problem is the leaders of the countries with large oil reserves are socialistic and worse. They run their oil operations in an unbusiness like fashion. The leaders in interest of maintaining their power nationalize oil fields and breaking contracts with the international oil companies.  Thus the international oil companies lose all interest in investing in the areas where there are large oil reserves. How much do you think they are investing in Venezuela ? They would be fools to add a single cent to what they have already spent now that Chavez has nationalized the oil fields.
Thus oil supplies are tight and the prices are staying up. By recognizing what is happening one can predict that the prices will continue to go up.
Again its so easy to see that socialism is such a bogus system. This is just what one should expect when a government owns the oil industry. Socialism is not fairer than capitalism. Its just a shiny paint job put on authoritarianism. Or in more brief terms: Socialism Sucks.
Above and beyond oil this story demonstrates the need to honor contracts. Without honoring of agreements we set our societies back decades.
0 Comments