As I mentioned hereabouts a few weeks ago, resource nationalism - of various sorts - is on the rise. This trend is worth watching closely, serving as the nearly certain harbinger of global conflict.
Forbes | Triggered by Wednesday's OPEC meetings and last week's announcement of new regulations governing Brazil's offshore oil, I am devoting this week's column to examining whether government control of the resource sector is increasing as commodity prices continue to creep up.
Traditionally as commodity prices rise, national governments have sought to boost their share of the proceeds, either to save or to spend. When prices fall, by contrast, they have tended to loosen their fiscal regimes to encourage investment and extraction. The period from 2005 through the middle of 2008 was par for the course, in this respect. As the oil price increased, countries ranging from Kazakhstan to Russia to Venezuela sought to reduce the share of key projects managed by foreign oil companies; even the Canadian province of Alberta tried to change its royalty regime. While these policy changes may be politically popular--and according to some analysts, may even help fund infrastructure development--they also run the risk of further deferring investment in the oil and gas sector. The combination of weak demand, lower prices and tighter credit all contributed to a reduction in investment in hydrocarbons. While the investment outlook is still weak, some countries eased regulations early in 2009 in an effort to boost revenues and increase investment.
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