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Disaster capitalism — Peru, the BP Blob and PEMEX

22 May 2010

Reviewing the on-going environmental and financial disaster that is the lead mining operation,  Doe Run, Inca Kola News opines:

Any self-respecting country would have long expropiated and nationalized Doe Run Peru (DRP), kicked out the liars, thieves and environmental masters of disaster headed up by US Billionaire Ira Rennert and got the plant cleaned up, opened again and running to world safety standards. But not Peru.

Which got me thinking about The B.P. Blob.  It might be a radical, but rational step to expropriate and nationalize B.P., kick out the liars, thieves and environmental masters of disaster headed up by British billionaire Tony Hayward and get the oil spill cleaned up… to world safety standards maybe should, but won’t happen.  Not the United States.

Certainly, the disaster in the Gulf of Mexico is a larger, potentially much more catastrophic threat not just to the United States and its environmental and economic survival, but to several nations (including Cuba and Mexico), but — of course — no one is going to talk about expropriation.

But, why not?  What Otto wrote was kicking around in the back of my head while I watched, without a lot of interest, the U.S. news shows.  I happened to watch, without much interest, the substitute presenter for MSNBC’s Rachel Maddow Friday night.  The lead story was about a loonie Senatorial candidate — a doctrine “Libertarian” (or, in Latin American terms, a neo-liberal of the General Pinochet stripe).  He apparently is naive, or doctrinaire enough to openly complain that civil rights protections interfere with business, which made him newsworthy, which he compounded by defending B.P., saying “accidents happen.”  Interesting, but only mildly so.  But what caught my attention was the discussion of the oil and gas industry with the substitute and Danielle Bryant of the Project on Government Oversight:

Fancy that:  the United States — from whence came the argument that dependence on PEMEX as a major revenue source is somehow a bad thing — depends on oil and gas revenue for a large chunk of its income and recognizes oil and gas deposits as a public resource.  The  United States Ambassador Henry Lane Wilson   — together with Lord Cowdrey of Aguila Oil (now part of B.P., naturally) — were the driving forces behind the counter-revolution of 1913, that sought to stop a mild rise in those very royalties that are just assumed to be normal in the United States.  Mexico fought a horrible civil war as a result, one reason the public ownership of natural resources was indelibly inscribed in the 1917 Constitution.

When Mexico nationalized the oil and gas industry in 1938, PEMEX became the country’s largest single company.  The fact that PEMEX itself is the largest single source of state revenue then, shouldn’t be all that surprising.  As a state enterprise, it doesn’t really have to turn a profit particularly, and should be a mainstay of state income.  As Ms. Bryant is saying, the U.S. oil companies, are getting huge tax breaks, but in a rational system, might just be THE single largest source of U.S. government income.  Is that bad?

The second argument — again coming from north of the border — is that PEMEX is corrupt and wasteful.  So it is.  I’m not sure, given what we know about B.P. and the U.S. subsidies to the oil and gas industry, that private enterprises are all that more puritanical and cheese-paring.  Stories of B.P. executives toasting their new drilling (just before it started spewing all over the Gulf) with champagne and caviar while lolling in a yacht don’t sound all that virtuous to me.  Besides, the “corruption and waste” usually mentioned in connection with PEMEX are things like union workers salaries and pensions… which, at least have the virtue of being spent in the local economy — tacos and beer maybe — but mostly fueling a middle class lifestyle for those workers.

And, then there is the argument that foreign oil companies (meaning the privates when the advice comes from the U.S.) are more technologically advanced than PEMEX and have the experience needed for… get this… deep water drilling.  Uh-ohhhh.

And, as I recall, B.P. was specifically mentioned as one of the companies that could run drill Mexican oil in the Gulf.  While we were saved (for now) from the disaster, PEMEX does need to upgrade its technology and needs the funds to do that.  That is, IF PEMEX is going to keep up with demand from… where else… the United States.

PEMEX — if it is to pump more oil, and, in the short-run, it probably will, given the prospect of a U.S. shortage (or, at least the perception of a shortage), there’s every reason to be suspicious of private industrial technology.

One advantage of state oil companies is that safety isn’t a matter of keeping employees (or their survivors) from suing so much, as it is a matter of protecting citizens — the owners themselves.  The Brazilian and Norwegian state companies — which contract with PEMEX — both have good safety records, and are more trustworthy than the privates.

That is, IF PEMEX even needs to keep pumping out oil.  After all, given that the biggest argument is the over-dependence on oil revenue, why not just stick to domestic use and create a smaller, safer oil and gas industry?

“Liars, thieves and environmental masters of disaster” seem to be endemic to the extractive industries, and it’s a challenge to purge them.  Peru and the United States, though, are at the disadvantage of having ceded control of their natural resources to those outside the people’s interests and are losing not only their environment but their self-respect.

7 Comments leave one →
  1. otto permalink
    22 May 2010 8:10 am

    Small correction (i’m a wonk and really can’t help myself): Doe Run Peru (DRP) isn’t really a mining operation. It’s a smelting complex where the vast majority of business is done with concentrates shipped in from other mining companies. Lead is one product, but different metals concentrates also get turned into their useful metals there (copper, zinc, etc).

    For a really basic concept of the place, imagine the crud of three dozen small and medium mining operations dotted up and down Peru all coming out of two chimney stacks. The town of La Oroya is also in a natural geological basin surrounded by higher mountains on all sides, so if your eyes aren’t watering it means it’s windy that day.

    It’s a fun place. Everyone should go there once (esp enviro denial merchants). But on the other hand, when the smelter is working the employees make multiple times the national average salary so the locals are keen to see the place open up again along the path of least enviro resistance.

  2. don quixote permalink
    22 May 2010 8:35 am

    From Bob Herbert in todays NYT

    “This is the bitter reality of the American present, a period in which big business has cemented an unholy alliance with big government against the interests of ordinary Americans, who, of course, are the great majority of Americans. The great majority of Americans no longer matter”

    Correct me if I’m wrong but isn’t Herberts right on quote the very description of Fascism?

    Maybe Abbot and Costello had it right,
    “Who’s on first?
    No, Who’s on second, What’s on first!”

  3. Maggie Drake permalink
    22 May 2010 3:49 pm

    And it gets worser…


    Were you referring to Ron Paul’s son? Holy Toledo, he would like to ammend the Civil Rights Act…just another nazi – but man are they coming out of the woodwork or what?

  4. Maggie Drake permalink
    22 May 2010 3:55 pm

    Dang let me try it again:

    Sworry. (Sworry, new word.)

  5. 22 May 2010 4:14 pm

    Nah, the Nazis were too liberal for the Libertarians… they had government-built highways 🙂

    I like “sworry” — sort of a a nice shorthand way of saying “I’m worried enough to swear… sorry!”

  6. The Destructionist permalink
    23 May 2010 4:14 pm

    In the next four weeks, the Dow Jones Industrial Average will drop at least 300 points upon growing fears of the ongoing economic crisis looming in the United States and abroad as instability in Greece and other European countries suffer the devaluation of the Euro as it tumbles into “no man’s land.”

    BP’s latest attempt to cap the oil pipeline 5,000 feet underwater (a.k.a. “Top Kill”) using robots will fail. They will then come up with a “new plan” out of thin-air in an effort to seal the pipe and to instill confidence in the public. The Obama Administration will finally step in to take control of the operation, adding much needed resources in an effort to assuage the outrage being felt by Americans everywhere over this environmental catastrophe. A team of engineers and scientists will be sent down to the ocean floor, via bathyscaphe, in order to view the damage head-on and to make assessments as to how to repair the damage.

    Is this a future foretold, or just simple deductive reasoning?

    You decide.

  7. Maggie Drake permalink
    23 May 2010 11:01 pm

    heehee. Heh sworry I’ve been playing hooky at the hot springs while the world crumbles around us.

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