Thursday, September 08, 2005

Federalism a recipe for disaster? :: Reuters


"Unless there is some central control, like a national oil company, there is going to be chaos, especially if preference is given to regional laws that would override federal laws," said Muhammad-Ali Zainy, senior energy economic and analyst at London-based Center for Global Energy Studies.
. . .
"The constitution does not have a clear, detailed or mature vision about the issue of oil. This is a recipe for chaos," said Mustafa Alani, an Iraqi expert at Dubai-based Gulf Research Council.

"We will not only lose central decision making in the process but also the question of legislation. Companies will face huge legal problems. If they sign with a political entity, their contract may not be protected in the long term," he added.
. . .
Oil multinationals are waiting until a new investment code with a legal and regulatory framework is in place. International oil firms are eyeing the giant largely undeveloped oilfields.

"Unless they are going to be very clear about management and ownership of resources then this will open the doors for delay and discourage international oil companies," said Zainy. "But if you have a vague constitution and a law which distributes responsibility right and left, then it may be difficult for international oil companies to hammer out agreements," he added.
It's a wonder that any markets function without centralized government ownership and intervention. What was Adam Smith thinking with that invisible hand idea he had?

Sarcasm aside, the easy point to make is that you don't need centralized government ownership in order to efficiently develop your oil fields. I don't think there's any question that it will be best to decentralize and privatize ownership of the fields.


Anonymous Dubai Property said...

Oil prices rise, and the country, 80% of the budget which is income from the sale of oil, should base its policy of this

6:06 PM  

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