Petroleum

General info. “Oil still in the ground: 1,297,000,000,000 (bbl) At current consumption levels, and assuming that oil will be consumed only from reservoirs, known reserves would be gone around 2039, potentially leading to a global energy crisis. The vast majority of oil that has been produced by the earth has long ago escaped to the surface and been biodegraded by oil-eating bacteria. Oil may migrate hundreds of kilometers horizontally or even short distances downward before becoming trapped in a reservoir.” ( Does this add doubt to which nations should have the rights to certain reserves if it wasn’t even produced in the that nation?

Oil dependence In 2003, the world consumed just under 80 million barrels per day (MM bpd) of oil. U.S. consumption was almost 20 MM bpd, two-thirds of which was in the transportation sector. Viable mitigation options exist on both the supply and demand sides, but to have substantial impact, they must be initiated more than a decade in advance of peaking.

Oil as a privatized resource Saudi Arabia

Oil concessions “ 1933: The original concession called for an annual rental fee of 5,000 British pounds ( £ ) in gold or its equivalent until oil was discovered; a loan of £ 50,000 in gold to the Saudi government; a royalty payment of four shillings gold per net ton of crude production after the discovery of oil; and the free supply to the government of specific quantities of products from the refinery Aramco was to build after oil was discovered. ” The company received exclusive rights to explore for, produce, and export oil, free of all Saudi taxes and duties, from most of the eastern part of Saudi Arabia for sixty years. The terms granted by the government were liberal, reflecting the king's need for funds, his low estimate of future oil production, and his weak bargaining position. In 1950 a fifty-fifty profit-sharing agreement was signed, whereby a tax (called an income tax, but actually a tax on each barrel of oil produced) was levied by the government. This tax considerably increased government revenues. By 1988 Aramco was converted to a totally Saudi-owned company called Saudi Arabian Oil Company (Saudi Aramco). By the 1990s, Saudi Aramco had responsibility for all domestic exploration and development--its mandate was expanded to include all Saudi Arabia

Case Study #2 Oil as a common good: “The Alaskan Permanent Fund uses revenue from state oil leases to invest in stocks, bonds, and similar assets, and from those investments pays yearly dividends to every resident. Alaska’s model can be extended to any state or nation, whether or not they have oil.”-Capitalism 3.0.

US Bonds $9,406,600,000 Non-US Bonds $1,262,900,000 US Stocks $10,322,200,000 Non-US Stocks $5,160,800,000 Global Stocks $5,479,600,000 Real Estate $4,080,700,000 Alternative $2,316,900,000 Alaska CDs $213,600,000 TOTAL $38,243,300,000 LAW: At least twenty-five percent of all mineral lease rentals, royalties, royalty sale proceeds, federal mineral revenue sharing payments and bonuses received by the State shall be placed in a permanent fund, the principal of which shall be used only for those income-producing investments specifically designated by law as eligible for permanent fund investments. All income from the permanent fund shall be deposited in the general fund unless otherwise provided by law [Effective February 21, 1977].