[Marxism] After the oil is gone
rrubinelli at earthlink.net
Sat May 14 09:37:44 MDT 2005
Of peaks and peaks:
"In 1928, Venezuela was the world leader in petroleum exports. It
remained the world leader until 1970, the year its domestic production
peaked. The Venezuelan peak coincides with the 1970 peak in domestic US
oil production. In neither country was this production peak determined
by scarcity of resources, or depletion of reserves. In both countries,
the production peak coincides with a peak in the rate of return on
The determinants of capitalist production are the elements of capitalist
reproduction in its totality, and those elements are cost, price, and
the mass and rate of profit. The decline in US and Venezuelan production
after 1970 coincides with a decline in the rate of return on investment.
The declines also coincide with increased production from Saudi Arabia.
Between 1970 and 1973, Saudi output doubled to 7.6 million barrels
The shift in production to Saudi Arabia was based on reduced costs of
production, costs that are less than half the world average. All of
OPEC's increased daily output between 1970 and 2003 is attributable to
the net increase in Saudi production as increases in Nigeria, Qatar,
Algeria, Indonesia, the United Arab Emirates have been offset by
production declines in Iran, Kuwait, Libya, Venezuela, and Iraq.
Behind, or more correctly, preceding the declining rate of return there
had been the massive increase in the fixed assets, the technical
component for petroleum production. Saudi Arabia, through its lower
production costs, and increased output, supported by US petroleum
companies, led OPEC into tripling and quadrupling the price for oil,
attempting to offset the decline in the return on investment.
The OPEC price increase was preceded and followed by a wave of
nationalizations of oil company production facilities and assets, the
"concessions ," including nationalization of the assets of the
Arabian-American Oil Company (Aramco). In 1975, Venezuela enacted
legislation for the compensated nationalization of its oil producers. At
the time of nationalization, 1976, three companies, Exxon, Shell, and
Gulf Oil accounted for 85 percent of output and 75 percent of manpower
at the newly formed Petroleos de Venezuela S.A. (PDVSA).
Exploration and development of new fields, frozen under Betancourt, were
made priorities for PDVSA. Extensive, and expensive, E&D programs were
approved. Between 1976 and 1982, capital expenditures increased 160
percent. Daily output continued to fall, and by 1982, production was
only half the 1970 production peak. Proven, recoverable reserves from
conventional sources increased 34 percent. This bears repeating: while
daily output continued to fall, proven recoverable reserves increased.
Daily production levels were, and remain, independent of proven
Further exploration and development has continued to yield increased
estimates of proven recoverable reserves. 2003 reserves from
conventional sources are now twice those estimated in the peak
production year of 1970, despite the continued restriction of daily
Good-bye Hubbert, and good riddance. Hello Hugo."
It should be noted that the increase in reserves is an increased in
conventional reserves, NOT the heavy oil of the Orinoco belt. The
reserves discovered in the 70s,80s,90s were conventional and generally
"lighter" and "sweeter" than those developed earlier.
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