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Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: Keith Feral who wrote (199631)	8/27/2006 11:54:46 AM
From: Hawkmoon	Read Replies (2) \| Respond to of 281500

Look at the political restructurings of oil contracts too. I hope that Chad's decision to revoke all Chevron licences in their country is met with the strongest level of sanctions by the US. Chad's decision to nationalize their oil industry by revoking Chevron's license for not paying taxes is a horrible precedent that demands urgent policy by the boys in Washington. I know nothing about the issue. But it's certainly a government's right to declare the contract null and void if one party is violating it (by not paying taxes, I presume), or to impose fines and seize production equal to what is owed. However, nationalizing the entire oil sector is something else entirely unless the government reimburses the private company for the money and equipment it has invested in the enterprise. As for figuring out what the risk premium in oil, production and exploration is certainly one key, since the profit motive is very extreme now and encourages oil exploration. But what happens when the results of that exploration bring the discovery of new reserves? And how will this additional production impact the fact that current oil supplies have been at levels not seen since 1998, when the price of oil was effectively halved due to the glut of additional production? Hawk