What if the Norwegian citizens had had the chance to manage their own individual oil funds or share of oil revenues?

Sir, I refer to David Sheppard’s “Norway fund to sell off oil shares” November 17

At first sight we are of course all impressed with that the Norwegian Oil Fund has been able to accumulate US$200.000 per Norwegian. 

The question is though, had the Norwegian oil revenues been paid out to and invested directly by the Norwegians, would they in average have more or less than US$200.000, and would the Norwegians, in average, have been stronger citizens as a result of having to take on that responsibility on their own?

And when we read that what we always thought as the Norwegian Oil Fund or the Norwegian Government Petroleum Fund, is now known officially as the Government Pension Fund Global, the natural question we have is if all that money is now only to go to pensioners? If I was a young Norwegian with ideas of my own and in need of capital, I am not sure I would look too favorably at that possibility.

And let’s be honest about the results. Much of it, or perhaps even most of the financial returns obtained, which are perhaps more than the oil proceeds injected, have been direct consequences of US and Europe having kicked the 2007-08 crisis can down the road, injecting huge amount of liquidity with QEs which, together with the ultralow interests maintained, have inflated all financial assets.

Sir, I was appointed the first diversification manager of the Venezuelan Investment Fund created in 1974, basically a fund very similar to the Norwegian Oil Fund. It took me only two weeks to become convinced it would not work, and so I left.

All this sort of centralized accumulations of wealth sooner or later loose contact with the final beneficiaries and with their original purpose and fast (Venezuela) or little by little (Norway) begin functioning more in terms of the wants and needs of those managing it.

When we now start reading about how that Norwegian fund begins to assign more and more value to issues like sustainability and ethics, which of course is good, we do wonder though how much of that is more based on managerial show-off than on a real mandate from its final beneficiaries.

Again, if I was that young Norwegian in need of capital, or just wanted to construct my own retirement nest, I can easily hear me saying… Great, you do all that but, before you start, give me my share. 

And let’s face it. One reason Norway’s government have been able and willing to set aside oil revenues in the fund is that they receive other type of compensations, like gas/petrol consumption taxes. Norway has the highest gas prices in the world, about $2.40 per liter (Venezuela less than $1 cent per liter)

I hear you Sir. “Here is just a Venezuelan being envious of the $200.000”.

Of course I am envious but, believe me when I say, that as a defender of oil revenue sharing, I would much have preferred my fellow citizens to have only a tenth of that amount, but in the process have learned more of how to stand on their own, and freeing themselves from having to depend on redistribution profiteering governments or fund managers.

PS. What about the Norwegian Fund selling off oil shares? Sounds reasonable but their current 6 per cent invested in the oil and gas sector is not that exaggerated either. Can you imagine what the Norwegians would say if Norway runs out of oil and the Fund stands there with no investments in oil?

@PerKurowski

Should it be required for a sovereign to be placed on a “The Bad” list, for its financiers to be morally concerned?

Sir, Jonathan Wheatley and Eric Platt write: “Just how much room for manoeuvre does cash-strapped Petróleos de Venezuela have? It is the question that has dogged investors, economists and the South American country’s own people as the government of Nicolás Maduro struggles to manage a crippling debt burden and cling to power” “Debt swap respite for Venezuela state oil group” October 25.

No! I can assure you Sir that most Venezuelan’s, are much more concerned with where they will get food or medicines for today, and about whether they should dare to walk out on the street, than with PDVSA’s debt.

And that should also concern PDVSA’s creditors, because it is truly a shame if they are totally uninterested in what human right violations they might be financing.

For instance, petrol (gas) is still being sold at about US$ 1 cent per liter, only so that government partners can make a killing smuggling it over the borders.

Really, it surprises me that these type of issues seem so irrelevant to FT. 

@PerKurowski ©

In Venezuela there’s much human suffering because of lack of food and medicines; but petrol is 1 US$ CENT PER LITER!

Sir, I refer to your editorial "Venezuela’s problems can no longer be ignored" August 19.

Of course as a Venezuelan I pray for my country to get out of that tragic black hole into which crooks or naïve fools has submerged it controlling 97% of its export revenues. 

When we get out of it, which we will, we must see to never to fall into it again. And what we must do for that is to share out all oil revenues directly among the citizens, so to have our governments operate solely with the tax revenues provided by We the People.

But for the rest of the world, there also are important lessons to be learned. One is that stupid and irresponsible economic policies can cause just as much violation to human rights than any of those other sources usually identified. And when those economic crimes are especially grievous, those responsible for them should be prosecuted in international courts.

For instance, right now when there is huge human suffering in Venezuela, because of the lack of food and medicines; petrol (gas), even after it was raised a mindboggling 6.000 percent in February this year, is still being sold at less than ONE US$ CENT PER LITER - FOUR US$ CENTS PER GALLON.

That petrol should be sold, as a minimum, at its world price as a commodity. And the resulting revenues shared out equally to all, so that its citizens could be better positioned to deal with the de-facto state of emergency that exists; and petrol consumption would go down, and more petrol could be exported, and more food and medicines imported.

@PerKurowski ©

http://theoilcurse.blogspot.com

In the midst of the Venezuelan pandemonium, is not selling petrol at less than $2 cents a liter a crime?

Sir, Daniel Lansberg-Rodriguez, describing Venezuela’s current plight writes: “Food and medicine are scarce. Anemic oil prices and a heavy debt load leave scant foreign exchange for the import sector. “Venezuela sets the stage for a chaotic and tragic exit” May 30.

What’s worse, within the pandemonium, few react to that petrol, even after it was raised a 6.000 percent in February this year, is still being sold at less than $2 cents per liter. Perhaps the most serious problem in Venezuela is not Maduro, but the lack of a responsible elite, that is willing to speak up on what is wrong and right.

If the price of petrol sold domestically was raised to its world value, and the resulting revenues all paid out in cash, to all citizens, that could provide them with what they might need to cover the basic food needs. And, to top it up, that would free a lot of petrol for exports.

I myself have tried for long to have the Organization of American States to look into if whether giving away petrol almost for free, while there is lack of food and medicines, does not qualify as an economic crime against humanity. Seemingly OAS/OEA prefer to look the other way.

@PerKurowski ©

Is the concept of economic crimes against humanity too much for governments to handle?

Sir, Andres Schipani writes that Henrique Capriles, with respect to the government’s actions on the recall referendum says: “they will be blocking the only democratic solution we have now. That will be throwing petrol on to the fire.” “Maduro rival rallies revolt in Venezuela”

But, what about throwing some petrol on the hunger in Venezuela? Even after it was raised a mindboggling 6.000 percent in February this year, petrol is still mindboggling being sold at less than $2 cents per liter.

Luis Almagro, the head of the Organisation of American States finally speaks out on the issue of Venezuela, good for him. The previous decade, under the chair of José Miguel Insulza, OAS’s silence was just too embarrassing.

But Almagro should also ask the Inter-American Commision on Human Rights: Is not the giveaway of petrol in a country where there is lack of food and medicines, an economic crime against humanity?

I formally asked IACHD that in 2015, and in 2009 by means of an Op-Ed in Caracas, but I never received any response. I wonder, is the sole concept of economic crimes against humanity just too much for governments to handle?

In Venezuela I have proposed to increase the locally sold petrol to at least its world price as a commodity, and share out with all citizens the new revenues. In this way most citizens would be a bit better positioned to deal with the de-facto state of emergency that exists. And petrol consumption would go down, and more petrol could be exported.

@PerKurowski ©

Yes to a tax on carbon. But no to hidden subsidies or it going to tax revenues profiteers/distorters

I come from an oil extracting country, Venezuela, and so of course I should be horrified of a carbon tax that, one way or another, would affect the value we get from liquidating a barrel of non renewable oil forever.

But I am not, because in order to act responsibly towards the planet that our children will inherit, I accept the need to impose some restrictions on its use.

And I therefore entirely agree with Tim Harford in that “We can’t rely on high oil and coal prices to discourage consumption: the world needs — as it has needed for decades — a credible, internationally co-ordinated tax on carbon.” “Cheap oil and its consequences”, December 20.

But how the revenues produced from that tax should be handled, is an issue of utmost importance.

Let me start with the hardest concept to understand for all who do not posses oil on their own. The reason why you can charge a very high tax at the pump is the very high convenience value consumers give to petrol/gas. And so it is not really correct for a country that did not give up that non-renewable resource, to, by means of taxes, capture all that rent for its own benefit.

In some ways it would be like if oil extracting countries imposed a tax on the consumption on all foreign products that have especial attractiveness to their local consumers… a kind of luxury tax directed solely to the luxuries provided by others. What would for instance France say about a tax that in an oil extracting country they taxed French wines valued over a certain price range?

And we are not talking about peanuts. As I wrote in a letter published in FT in 2003 at that time, before the big increase in oil prices, for every $1 received by the one supplying the petrol, the European taxman got $4. And sometimes at that time, like in Germany and Spain, much of those tax revenues were even used to subsidize coal, like rubbing salt into the wound, and this even while the petrol tax was justified in environmental terms.

So how do I suggest the carbon tax revenues are applied? I have no defined idea about it, except wanting to avoid that some carbons get a better treatment than others, and that all those revenues fall into the hands of vulgar tax revenues profiteers or distorters.

What if all carbon taxes collected in the world were put in a big pot and thereafter just distributed in equal shares to all citizens of the world? That could both dent existing world inequalities (a stimulus for the economy), and increase the general interest in the fight for a better environment.

@PerKurowski ©

Redistribution profiteers who committed economic crimes against humanity sequestered Venezuela

Sir, I refer to Ricardo Hausmann’s sadly true “It could be too late to avoid catastrophe in Venezuela” February 4.

These days when so much is said about fighting inequality, Venezuela is a tragic example of what happens when a country falls into the hands of shameless redistribution profiteers. All countries need to develop more transparent government accounts that allows us them to measure the real costs of redistributing wealth.

For instance in the case of Venezuela the fact that the prices of petrol (gas) have not increased once since Chavez came to power 17 years ago has signified that just in free petrol the country has over the last years given away more than in all their other social programs put together… if that is not an economic crime against humanity (and environment) what is. I have tried to denounce it to the Organization of American States but they are more interested in conventional and traditional crimes against humanities.

Over the last 15 years the poor of Venezuela might not have received even 10 percent of the oil wealth that was redistributed… which would indicate a redistribution commission of 90 percent.

Clearly if other methods like direct oil revenue sharing with citizens had been used, the 10-90% figures here could have been 98-2%. And of course, had the oil revenues belonged to the citizens, the government could not have “used it to quadruple the foreign debt.”

Set into this context it is obvious that all should closely study experiments like Finland’s substituting with a basic monthly income for all the bureaucrats’ management of benefits.

PS. One of the most sad events in my lifetime has been when the US did not follow through on the idea of promoting oil revenue sharing in Iraq. Had it done so the whole middle east, and of course Venezuela, if following the example, could have been facing much better realities.

@PerKurowski ©

Former Executive Director at the World Bank, for Venezuela, 2002-04

When does a subsidy become an outright gift? Hugo Chavez committed an odious economic-policy crime against humanity.

Sir I refer to Andres Schipani’s and John Paul Rathbone’s “Oil’s slide forces Venezuela to rethink subsidies agreed in Chávez glory days” January 15.

The article refers to “About 600,000 bpd of subsidized oil are consumed locally” but, since the local price of gas (petrol) is much less than 1-euro cent per liter, I would consider that to be much more of an outright gift than a subsidy.

The fact that Hugo Chavez gave away more value in gas (petrol) to those who drove cars, than what he spent on all his social programs put together, might be embarrassing for all those on the left for whom Chavez was a hero… but the truth is that, doing so, he committed an odious economic-policy crime against humanity.

Do not reduce what is an economic crime against humanity to merely being a “petrol subsidy”

Sir, Daniel Lansberg Rodriguez, I presume my former colleague as columnist in El Universal, as I assume he has been censored too, writes about “slashing petrol subsidies” in Venezuela, “Latin America swaps its populists for apparatchiks” August 20.

Hold it there, “petrol subsidies” is not the correct way to describe selling gas at less than 1 US$ cent per gallon, at less than 1 € cent per 5 liters, less than 1 £ penny per 6 liters of petrol or gas.

To put it in its real current perspective it means that, more than US$ 2.500 are handed over to each one of the more than 5 million cars on the roads of Venezuela, representing a value that by far exceeds what the government pays out in all other social programs put together… if we now can count the gas/petrol give away as a social program.

The International Court of Justice should be able to also handle these economic crimes against humanity.

Stealing and rent seeking has nothing to do with “social contracts”

Sir, your reporters, on the issue of fuel subsidies, April 19, wrote: “For oil producers such as Venezuela… fuel subsidies are part of the social contract and relatively manageable.”

Venezuela sell’s its gasoline locally for less than 2 US$ cents per liter. Your reporters should never ever confuse blind and irresponsible rent seeking by which, those in power, usually with cars, rob the implicit value of the petrol or gasoline, from those poor and not in power, usually without cars, with any type or form of “social contract”.

Greed comes in many shapes and forms

Sir in “more comment online”, “Roubini cameo” we read about a documentary Oliver Stone is preparing on bankers and greed. September 11. Well greed comes in many shapes and forms, not just pecuniary but also ideological. Oliver Stone has for instance recently shown much ideological greed (who knows, perhaps pecuniary greed too) filming a documentary on Hugo Chavez, “South of the Border” where he does not even mention such facts that Chavez cheats the poor of Venezuela, to the tune of about 10% of GDP, by selling petrol at about two US dollar cents per litre (gas at 10 cents per gallon)

Oil revenue sharing stands the best chance of stopping wasteful energy use in the Gulf.

Sir Jim Krane in “America can stop the Gulf’s wasteful energy use” August 14, lambasts the United Arab Emirates “with their monster 4x4”, and wants the US, with its own so very heavy carbon foot print, to lean hard by means of nuclear energy agreement on the UAE´s ruling oil sheiks, to move it away from the fossil fuels.

One of Krane’s doubtful arguments is that although “raising energy prices would help” that is impossible because since the ruling sheiks “do not give their subjects a vote they must keep them happy in other ways”. For his information, in Venezuela, the citizens have the right to vote, but yet the price of gas-petrol, around $11 cents per gallon, is about 15 times lower than in UAE.

No, the best way to stop the gas-petrol waste is to allow the citizens to participate directly in the oil revenues… so that its waste hurts the citizen´s own pockets... but that would mean putting an end to oil-autocrats in UAE and Venezuela. Yes, and so what? An extra bonus... good riddance!

I guess it is time for your reporter to change location

Sir I am sorry but Benedict Mander completely misses the angle when in “Red tape congests Venezuela’s roaring car trade”, July 11, he describes the governments “new rules that 30 per cent of cars sold from next April must have dual natural gas and petrol tanks” as something extraordinary. I just need to ask what extraordinary measures he believes the Crown would have to take to reign in car sales if it sold petrol at 4 cents of a dollar per litre and if it subsidized the import of new cars by means of an exchange control system.

When a foreign reporter does not see the absolute grotesque in the state giving away petrol at prices below distribution costs, I guess that reporter has been to long in the country and has become blind to its realities. There is supposedly a study that shows that people after having lived long enough close to a railway station do not even hear the trains, because of natural anatomic process of adjustment.

What kind of reporting is this?

Sir Benedict Mander reports that “Drivers put cars blame on chávez for Caracas congestion” May 30, and nowhere does he mention that the purchases of cars is subsidized by means of the foreign exchange system and that petrol is sold for about 2 cents of a Euro per litre, and which has made a small country like Venezuela import 750.000 new cars to place on already jammed roads, in just two years. What kind of reporting is this?

Is Benedict Mander trying to hide the fact that this supposedly socialist government is taking way over 10% of Venezuela’s GDP from the poor people who have nothing and giving it to those citizens who have a car?

But the Venezuelans will not get their gasoline.

Sir, in your editorial “Chávez gets his oil” June 28 you mention that with current oil prices “it scarcely matter that the amount of oil produced has declined in Venezuela” and I would suggest you read Najmeh Bozorgmehr’s report in FT the same day on how “Fuel crisis increases pressure on Tehran” where Iran’s fuel rationing crisis is described.

For your information, according to projections based on the current sales of vehicles, Venezuela a country with only 26 million inhabitants and a GNI per capita of less than US$ 5.0000, will in the years of 2006 and 2007 have placed a total of 750.000 new gas guzzlers on its roads, partly thanks to the craziness of a domestic gasoline price of under 3 US cents per liter. Can you imagine what will happen when you have to start to adjust gasoline prices? One of the first symptoms of the existence of a purely populist government is that all planning gets thrown out the window and you live day by day.