RE: Life after the oil crash

From: Tjalle T Vandergraaf <>
Date: Sun Oct 30 2005 - 14:45:02 EST



I agree with you there, Glenn! In Canada, we (the government) have set up
"Crown Corporations" to deal with this sort of thing. The government owns
these corporations and finances them to do something that is seen to be "in
the common interest" and that private companies either cannot or do not want
to do. Until I retired, I sued to work for one of those crown corporations,
AECL (Atomic Energy of Canada, Ltd) whose job it was to develop nuclear
power reactors. At the time AECL was set up (in 1952), it made sense to
build on the expertise developed during WWII and make use of our uranium
resources. Private companies in Canada could not do this. Was it
efficient? Probably not, but it was the only option at the time. Mind you,
the government could have contracted the work out to, say GE or
Westinghouse, but that would not have been any more efficient (keep in mind
that the employees in Crown Corporations [used to] trade off high salaries
for interesting research and pretty secure positions). Come to think of it,
I doubt if subcontracting to companies like Bechtel is not very efficient


But I was not promoting that the government should be involved immature
industries and the oil industry is a mature industry. I can the government
involved in activities that would otherwise become prohibitively expense for
the poor and those living in the suburbs.


A similar case can be made for the airline industry. For years, Air Canada
had pretty well the monopoly on air travel in Canada and, airfares were
generally higher than over comparative distances in the US. However, Air
Canada also had the mandate to service routes that were not very popular but
that were (and are) essential in the Canadian North. With deregulation,
airfares between major cities have decreased but those to remote locations
have increased. Whether this is for the common good is debatable.





From: [] On
Behalf Of
Sent: Saturday, October 29, 2005 10:32 PM
Subject: Re: Life after the oil crash


This is a reply to Chuck,

The government might be capable of doing a rationing plan (and I have no
doubt that that will happen whether I like it or not), but there is one
thing the government can't do well and that is run an oil company. In the US
can you imagine the head of the US agency in charge of exploration going
before congress to explain why he had just spent $100 million dollars on a
dry hole? (the most expensive well in the Gulf of Mexico was $140
million--it was a dry hole). The party out of power would love the photo and
grand standing opportunities about the incompetence of the poor guy getting
grilled. Such a situation would be great for the seismic industry. We would
shoot and process more seismic than we do now so that the head bureaucrat
could avoid those pesky congressional hearings. And after enough of those
hearings we would stop drilling altogether.
Received on Sun Oct 30 14:46:19 2005

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