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1. The Venezuela-Guyana Dispute over the Essequibo

Author:
Rafael Ramírez
Publication Date:
02-2024
Content Type:
Commentary and Analysis
Institution:
Istituto Affari Internazionali
Abstract:
The Essequibo[1] is a territory located in the North-East of South America, between Venezuela and Guyana, with a maritime projection towards the Atlantic. It has been part of Venezuela since 1777[2] under the rule of the Spanish Empire and then as the Republic of Venezuela since 1810. The United Kingdom illegally occupied it in 1814,[3] while Venezuela was going through a long and bloody war of independence. The UK tried to formalise the dispossession of the territory with the Paris Arbitral Award of 3 October 1899,[4] in a flawed process in which Venezuela was represented by the United States. The British Empire exercised its power to obtain a ruling in its favour. After the death of the lawyer Severo Mallet-Prevost in 1949, who represented Venezuela in this process, these irregularities became public knowledge.[5] In 1962, Venezuela denounced the nullity of the process before the United Nations and insisted on its historical claim.[6] On 17 February 1966, Venezuela and the UK signed the Geneva Agreement,[7] whereby the parties recognised the nullity of the Paris Arbitral Award and agreed to search for a negotiated solution. During this process, Guyana (independent since May 1966) would administer the Essequibo but without carrying out any activity that would modify the legal situation of the territory as established in Article V of the agreement, which states that “No acts or activities taking place while this Agreement is in force shall constitute a basis for asserting, supporting or denying a claim to territorial sovereignty in the territories of Venezuela or British Guiana or create any rights of sovereignty in those territories”. After four years, no progress was made in the negotiation, so on 18 June 1970, the two parties signed the Port of Spain Protocol,[8] to suspend the meetings for twelve years and to possibly use as an alternative one of the means of peaceful settlement provided for in the UN Charter.
Topic:
Oil, Territorial Disputes, History, and Borders
Political Geography:
South America, Venezuela, North America, Guyana, and United States of America

2. Distributional Implications and Share Ownership of Record Oil and Gas Profits

Author:
Gregor Semienuk, Isabella M. Weber, Iain Weaver, Evan Wasner, Benjamin Braun, Philip B. Holden, Pablo Salas, Jean-Francois Mercure, and Neil R. Edwards
Publication Date:
11-2024
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
The 2022 oil and gas crisis resulted in record fossil-fuel profits globally that rehabilitated the oil and gas industry, obstruct the energy transition and contributed to inflation. We analyse the size and the distribution of financial beneficiaries of these unprecedented profits across countries and across wealth groups within the United States, using company income statements and comprehensive ownership data, to construct a global network of shareholdings with 397,619 nodes. We estimate that globally, net income in publicly listed oil and gas companies reached US$916 billion in 2022. The United States was the biggest beneficiary receiving US$301 billion in fossil fuel profits both from domestic extraction and through global shareholding, more than U.S. investments of US$267 billion in the low carbon economy that year. Analyzing the U.S. distribution including privately held US companies, 51% of profits went to the wealthiest 1%, predominantly through direct shareholdings and private company ownership. In contrast the bottom 50% only received 1%. The incremental fossil-fuel profits in 2022 over those in 2021 were enough to increase the disposable income of the wealthiest Americans several percent and compensate a substantial part of their purchasing power loss from inflation that year, thereby exacerbating inflation inequality. Record fossil-fuel profits also reinforce existing racial and ethnic inequalities and inequalities between groups with different educational attainments. Our results also show that only a small share of overall profits benefits institutions that serve the wider public such as pension funds. We discuss how windfall profits taxes could be used to both lower inequality and accelerate the energy transition as increasing geopolitical tensions and climate impacts portend continued volatility in oil and gas markets.
Topic:
Oil, Gas, Inflation, Fossil Fuels, and Energy Transition
Political Geography:
North America and United States of America

3. Betting on Black Gold: Oil Speculation and U.S. Inflation (2020-2022)

Author:
Carlotta Breman and Servaas Storm
Publication Date:
06-2023
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
Sharp increases in systemically important crude oil prices have been a major cause of the recent surge in the inflation rate in the U.S. This paper investigates the extent to which the increase in oil prices can be attributed to excessive speculation in the oil futures market. Our analysis suggests that excessive speculation in the crude oil market has been responsible for 24%-48% of the increase in the WTI crude oil price during October 2020-June 2022. These estimates translate into an oil price increase of around $18-$36 per barrel and an increase in the U.S. PCE inflation rate by circa 0.75 to 1.5 percentage points during the same period. We complement the analysis with an empirical investigation of the crude oil market which shows that (speculative) long non-commercial open-interest positions in oil futures have increased considerably relative to short non-commercial positions. We further find that higher futures prices for crude oil ‘Granger-cause’ oil spot prices, the futures prices of corn and soybeans and the fertilizer price. These econometric results show that oil speculators have to be held accountable for not just raising oil prices, but also driving up food commodity prices. We finally discuss measures to clamp down on excessive speculation in oil in order to eliminate its systemically adverse consequences for the U.S. economy.
Topic:
Economics, Markets, Oil, Inflation, and Speculation
Political Geography:
North America and United States of America

4. US Needs to Play Larger Role as Swing Producer of Oil and Gas in the Current Crisis

Author:
Thomas J. Duesterberg
Publication Date:
11-2022
Content Type:
Special Report
Institution:
Hudson Institute
Abstract:
In response to Russian aggression in Ukraine, European nations have drastically reduced imports of crude oil, refined petroleum products, and natural gas from Russia. The 2021 levels of these energy imports were around 2.2 million barrels per day (mbd) of crude oil, 1.2 mbd of refined products, and 155 billion cubic meters (bcm) of natural gas on an annual basis.In addition to extreme difficulties in obtaining new sources of natural gas and to a lesser extent oil, the price increases throughout Europe since the onset of the war have been of historic proportions. In the days following the invasion, natural gas prices shot up by 62 percent, and UK energy prices were up by 150 percent. The full impact of the war, along with the related need to rein in the highest inflation numbers in over 40 years, has pushed Europe into a recession that threatens households and small businesses as well as European manufacturers’ ability to remain competitive. As a result, if the region cannot quickly assemble alternative supplies, the European commitment to assist in containing Russian aggression may weaken.
Topic:
Economics, Oil, Gas, Crisis Management, Supply Chains, Energy, and Russia-Ukraine War
Political Geography:
Europe, North America, and United States of America

5. Cutting Putin’s Energy Rent: ‘Smart Sanctioning’ Russian Oil and Gas

Author:
Ricardo Hausmann, Agata Łoskot-Strachota, Axel Ockenfels, Ulrich Schetter, Simone Tagliapietra, Guntram Wolff, and Georg Zachmann
Publication Date:
04-2022
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Following the Russian aggression against Ukraine, major sanctions have been imposed by Western countries, most notably with the aim of limiting Russia’s access to hard international currency. However, Russia remains the world’s first exporter of oil and gas, and at current energy prices this provides large hard currency revenues. As the war continues, European governments are under increased pressure to scale-up their energy sanctions, following measures taken by the United States, the United Kingdom, Canada and Australia. This piece argues that given the inelasticity of Russia’s oil and gas supply, for Europe the most efficient way to sanction Russian energy would not be an embargo, but the introduction of an import tariff that can be used flexibly to control the degree of economic pressure on Russia.
Topic:
Economics, Oil, Sanctions, Exports, Currency, Energy, and Russia-Ukraine War
Political Geography:
Russia, Europe, Ukraine, and North America

6. Not all political relation shocks are alike: Assessing the impacts of US-China tensions on the oil market

Author:
Yifei Cai, Valérie Mignon, and Jamel Saadaoui
Publication Date:
08-2022
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
This paper assesses the effects of US-China political tensions on the oil market. Relying on a quantitative measure of these relationships, we investigate how their dynamics impact oil demand, supply, and prices over various periods, starting from 1971 to 2019. To this end, we estimate a structural vector autoregressive model as well as local projections and show that political tensions between the two countries pull down oil demand and raise supply at medium- and long-run horizons. Overall, our findings show that conflicting relationships between these two major players in the oil market may have crucial impacts, such as the development of new strategic partnerships.
Topic:
Security, Oil, Conflict, Rivalry, and Energy Crisis
Political Geography:
China, Asia, North America, and United States of America

7. The Necessary U.S. Role in Fixing the Baghdad-Kurdistan Energy Dispute

Author:
Michael Knights
Publication Date:
06-2022
Content Type:
Special Report
Institution:
The Washington Institute for Near East Policy
Abstract:
A targeted intervention could aid American interests and the global effort to find a substitute for Russian and Iranian oil and gas. On February 15, 2022, Iraq’s Federal Supreme Court ruled that the 2007 oil and gas law for the Kurdistan Region was unconstitutional, requiring a review of numerous production sharing contracts and oil sales agreements. If the case prevents oil exports via Iraqi Kurdistan, then the world market will almost immediately lose 500,000 barrels per day, triggering higher oil prices, expanded windfalls for Russia and Iran, the collapse of Iraqi Kurdistan’s economy, and a dangerous turn in Baghdad’s ties with Erbil and with Ankara. In this timely Policy Note, Iraq expert Michael Knights calls for the United States to act with other concerned states to resolve the Baghdad-Erbil energy crisis. In doing so, he categorizes the sub-issues of FSC implementation on a spectrum from higher to lower consensus, and explains both sides’ views in an unvarnished, direct manner. A targeted intervention by the United States and its partners, the author argues, could guide the dispute toward a long-overdue resolution that greatly aids U.S. interests and the global effort to find a substitute for Russian and Iranian oil and gas.
Topic:
Oil, Gas, Crisis Management, Disputes, and Energy
Political Geography:
Iraq, North America, United States of America, and Kurdistan Region of Iraq (KRI)

8. Biden Sees Oil as Key to His Visit, but Does Riyadh Agree?

Author:
Simon Henderson
Publication Date:
07-2022
Content Type:
Policy Brief
Institution:
The Washington Institute for Near East Policy
Abstract:
The administration has signaled its intentions for the trip well in advance, but the realities of Saudi oil capacity and global energy forecasts should temper any U.S. expectations of a quick fix. The centrality of energy security to America’s historical relationship with Saudi Arabia is under strain. When Saddam Hussein invaded Kuwait thirty-two years ago and threatened nearby Saudi oil fields, King Fahd ignored the pleas of cautious senior princes who wanted a delay to discuss the issue and instead requested Washington’s immediate help—which he quickly received in the form of half a million U.S. troops and a multinational force. It was a perfect illustration of the longstanding strategic understanding between the two governments: Saudi Arabia will supply the world with oil, and the United States will defend the House of Saud.
Topic:
Economics, Oil, Joe Biden, and Energy
Political Geography:
Middle East, Saudi Arabia, North America, and United States of America

9. Remarkable Shift Implications of the Meeting of US Envoy to Libya with General Haftar in Cairo

Author:
FARAS
Publication Date:
08-2021
Content Type:
Policy Brief
Institution:
Future for Advanced Research and Studies (FARAS)
Abstract:
The US Embassy in Libya recently announced that US Special Envoy and Ambassador to Libya Richard Norland met General Khalifa Haftar, Commander of the Libyan National Army in Cairo between August 11-12 2021, as part of US efforts to support the parliamentary and presidential elections scheduled for December. The announcement followed statements in which Noland noted Haftar’s role in unifying the Libyan army. Norland also called on regional and international parties to help in the removal of foreign forces from Libya, much to the anger of the Libyan Muslim Brotherhood, who sensed a change in Washington’s attitude towards their organization. This was made even more evident when Saif al-Islam Gaddafi, the second son of Libyan leader Moammar Qaddafi, spoke to the New York Times in an interview published on July 30. In the interview, Qaddafi asserted that he would run for president in the coming elections. The development indicates Washington’s current attitude towards parties to the conflict in Libya and its potential approval of Gaddafi’s presidential candidacy.
Topic:
Oil, Islamic State, Conflict, Muslim Brotherhood, and Khalifa Haftar
Political Geography:
Turkey, Libya, North Africa, North America, Tunisia, and United States of America

10. The Biden White House and the Venezuela Crisis: Time for a Policy Change

Author:
Lucía Ramírez Bolívar
Publication Date:
02-2021
Content Type:
Working Paper
Institution:
Istituto Affari Internazionali
Abstract:
The incoming Biden-Harris administration has been welcomed by great expectations of impending changes in US policy after four years of the Trump presidency. Out of a wide range of issues, US foreign policy towards Latin America and the Caribbean is one domain where a shift in approach may be expected from the new administration.
Topic:
Foreign Policy, Oil, Sanctions, and Joe Biden
Political Geography:
South America, Venezuela, North America, and United States of America