Mr. Metaphor and the First Law of Petropolitics

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petro2.jpg

Thomas Friedman does it again and this time he talks about the First Law of Petropolitics;

“So, what you basically see in these countries is when oil is $20 a barrel, Iran is calling for a “dialogue of civilizations” under President Khatami. Magazines and journals are opening Iran. Iran is opening itself up to trade and interaction with the world. Reformers are getting elected. When oil is $70 a barrel, the president of Iran is calling for the destruction of Israel. When oil is $20 a barrel, the President of Venezuela is a little pussycat. When oil is $70 a barrel, he’s telling George Bush and Tony Blair – just about everybody else – to go to hell. When oil was $20-$30, George Bush looked in Vladimir Putin’s soul and saw a good man. When oil is $70 a barrel, you look in Vladimir Putin’s soul and you’ll see Gazprom, you’ll see a bunch of other newspapers and independent institutions that the Russian president has swallowed.

So it seemed just intuitively right to me that there was an inverse relationship between the price of oil and the pace of freedom. And so with Moisés help and his team, what we did was actually create a graph with the price of oil on one axis and we used the Freedom House graphs of their freedom index and just overlaid it. And what you basically see is this relationship where as the price of oil goes down the pace of freedom goes up in countries like Nigeria, Iran and Russia, and as the price of oil goes up the pace of freedom goes down, and the lines actually cross in all of these graphs.

Now, just to sum up, we have a – we know in our history the motto of the American Revolution was no taxation without representation. And the motto of petrolist states is no representation without taxation. If I don’t have to tax you – because all I have to do is drill an oil well, never drill my people – then I don’t have to represent you. And there is a real logic to this. Obviously these petrolist states, what happens is when they get this huge windfall, what happens is these regimes use it to buy off opponents, to insulate themselves from foreign pressures, to never have to construct a society where they have to maximize their openness to the world in order to extract the most energy entrepreneurship, creativity and intelligence from their people. They use this money so they can continue to rule by tapping an oil well and never tapping their people.

And hence, I argue the first law of petropolitics: As the pace of freedom declines, the price of oil goes up; as the price of oil goes down, the pace of freedom increases

We have moved basically from a bipolar world in the Cold War to a unipolar world in the post-Cold War into a multipolar world into the post-post-Cold War, which is the world of petrolist states. And these new poles – these new poles are not getting powerful, they are not getting rich by making microchips; they’re still making potato chips actually, but they’re getting rich because they have struck it rich on oil and therefore a new multipolar world is emerging with a whole new group of poles fueled, funded and financed by $70 a barrel oil. And for those reasons, I would argue, this is not your parents’ energy crisis.”

Related Links:

Running on Empty? How Economic Freedom Affects Oil Supplies; A large part of the world's oil reserves are outside the easy reach of free markets, with their incentives and disciplines. Oil prices are rising—not because the world is running out of oil but because the bulk of reserves are in countries where market incentives cannot work fully or in the hands of monopolists who may be exercising their power by restraining investment

Iraq Oil Output Lowest Since Invasion; In 2005, Iraq's exports averaged just 1.4 million barrels a day, which earned the country about $26 billion. This winter proved disastrous, with January exports failing to reach even 1 million barrels a day, said George Orwel, an analyst with Petroleum Intelligence Weekly (who’s writing a book about Iraq oil sector)

Geopolitical Oil Map of the World

The Crude Oils and Their Key Characteristics

Glossary of Energy Terms

Fareed Zakaria reflects on the Power of Oil

8 Comments

Why is it that after lesser academics and journalists toil at applying rentier state theory to oil exporters for, oh, twenty years, when Friedman repackages it with a catchy title, everyone suddenly sits up and takes notice?

Friedman is the master of the obvious. And he really has a habit of twisting a phrase into a dead horse, to mix a couple of metaphors (as he likes to do).

"The world is flat"? What's that?

If the guy didn't write for the Times, nobody would take him seriously.

On a positive note, that "graph" looks a lot like "Locke's Map" on Lost.

What suprises me is that Friedman gets invited to places like World Bank (to give key note speaches) and to IMF; and even Moises Naim, editor of Foreign Policy is respected economist who have worked in the World Bank previously.

ON THE FIRST (BLAH) LAW OF PETROPOLITICS

I normally enjoy reading Thomas L. Friedman’s articles and I envy the quality of his pen but frankly, in this case, it all reads as like what we in Venezuela refer to as “discovering the tepid water”, meaning making a big fuss of something everyone knows, and, if Friedman really feels that he must advice his own government “that the price of crude should now be a daily preoccupation of the U.S. secretary of state, not just the treasury secretary” then I can only conclude that the USA has a much more serious problem than oil. Of course to stuck petroleum income directly into the pockets of the politicians in countries with weak institutions, will distort their minds and make them act like bullies, what’s new?
Friedman, perhaps because I don’t see in his bio any reference to studies in economy, also thinks he is making an important point concluding, in reference to consumer countries such as the USA, that “we can affect the global price of oil by altering the amounts and types of energy we consume”, although he is absolutely wrong when he says “we cannot affect the supply of oil in any country”. Of course you can! The day consumer countries would be willing to guarantee a decent price for oil over a long period, that day producers would immediately produce more but, while what consuming nations really seem to be looking for is oil at the $5 per barrel predicted by the prestigious The Economist as late as in March 1999, then you can obviously only expect to be creating the conditions for oil at over $100. Want to help? Then ask your treasury secretary to offer good long term prices for oil, subject that most of the revenues are distributed directly to the citizens of the producing country.
By the way, and back to the demand, what they have currently placed on the board for fighting the oil addiction seem just like nicotine patches and chewing gums for a non meant new-year promise, and will only serve to guarantee that modern day successors of Mark Twain will also be able to argue that it is easy to quit, as they have done it a thousand times. Instead, $7 per gallon, that should do it!
Levying a new federal consumption tax on gas that would increase its price to about the level at which it has been in Europe, would reduce demand for imported oil, provide the government with about $300 billions in taxes to balance the accounts and benefit the environment. Yes, it would destroy many jobs, but it also would create new ones. Better to bite the bullet now before the current economic imbalances erode confidence in the dollar, and anyhow take the price to $7 but then, with no gain to pay for the pain. That, of course, would require leadership, which is even scarcer than oil.

see this post at Junk Charts;
http://junkcharts.typepad.com/junk_charts/2006/05/the_crossover_l.html
"Sadly, his most amazing finding is the least interesting: given two lines drawn on two different axes, measured in two different units (one in dollars, the other in index numbers), the crossovers are merely an artifact created by the chart designer. Just changing the scale, or shifting the lines vertically, will cause this amazing feature to immediately vanish"

Hi, I'm form Argentina and I think that Friedman is a clown. Good blah blah but his statements cannot be defended with facts for very long. "globalization 3.0", "the world is flat", "the golden jacket..." my Goooood! He is just stupid. Besides, the graphic is totally modified for visual impact. I'm surprised nobody have noticed that the scales for the years, are wrong. Is far as I know, between 1979 and 1995 there are 16 years. So... a given distance in centimeters, right? Well just check the other part: between 1995 and 2006??

The article is bull-shit and his writer is a mercenary, with no decency, someone who writes on "metaphor" about everything and does not explain nothing.

MASTER IN THE ARTS OF SUPERFICIALITY, I would say. Always saaying: "...what I call..." or "...I would argue..."

Best Regards from Argenina,


Nico.

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This page contains a single entry by Paul published on May 19, 2006 1:24 AM.

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