Thursday, August 3, 2000
It’s been twenty years, and the deadline established to keep the minutes of the European Union (EU) Inter-Ministerial meeting secret has elapsed. At last, we can read what was agreed to in the small German town of Kohlenweiss during a rainy autumn weekend in 1979, when EU Energy Ministers met in conclave to draw up a strategy on “how to defend oneself from the crude rent aspirations on crude of OPEC countries.”
One debate registered in the minutes seems particularly horrible with all its prejudices against oil-exporting countries. However, because of lack of space, I will limit myself to summing up the approved plan, as originally presented by German minister Grüngelde, a plan that allegedly hinged on the following five key actions.
The first measure (the most innocuous) was to strengthen the relations between European governments and the environmental organizations to such a degree that the latter could be used to apply pressure in favor of diminishing oil consumption without its affecting the more contaminating coal, which Europe happened to possess.
Secondly, a program of continued hikes in taxes on oil and its derivatives, especially gasoline, was established to ensure not only a drop in demand but also that day after day the oil producers would receive a lesser and lesser proportion of oil's real value in the final market, namely, the price paid by the consumer. In this respect, the countries pledged themselves not to allow a lowering of gas prices to the consumer so, each fall in the price of crude should set off an immediate increase in taxes.
The third course of action was aimed at weakening OPEC's internal cohesion and in that sense, using Cold War tactics (the Berlin Wall hadn't tumbled yet), disinformation was one of the recommended instruments, aimed principally at sowing doubts and suspicions inside OPEC itself regarding such things as compliance with quotas set by the organization.
The fourth element agreed to was the “Community’s prior interest to promote and support efforts that would lead to the privatization of the oil industry in OPEC countries.” The reasons are understandable, when among the arguments, is that “as long as the oil industry belongs to the states, they will have the possibility of brandishing the weapon of geopolitical bargaining.” The report established that “to achieve the goal of privatization, the ensuing competition among the partners would guarantee greater volumes of production and lower prices, in view of the fact that they all have a common interest in increasing profit and cash flow in the short term.”
The Fifth ...? Why continue?
I admit the above is pure fiction and that, as far as I know, it doesn’t exist except in my imagination. There’s no Kohlenweiss or Grüngelde. I have no knowledge of any such meeting and I definitely don’t believe that the European Union fixed a period of only twenty years to make documents of this kind public.
However, since reality is stronger than fiction, I trust the reader will pardon my cheek. Let’s see:
Since 1980 all taxes on oil and derivative have been hiked. For example, in the United Kingdom they went from 85% added value in 1980 to a confiscatory 456% in 1998. Obviously, during the same period oil products price index on the consumer level increased in the UK in constant terms from 100% to 247%, while, as if it were planned, the crude oil price index fell from 100% to a miserable 18%.
A barrel of oil contains around 160 liters of oil products broken down into gasoline (84), jet fuel (12), gas oil (36), lubricants (16) and heavy residuals (12). Today, when oil in Europe sells at a minimum $1.20 per liter, we see that this component represents more than $100—adding the other derivatives we come to a market value, that is, the price the consumer is prepared to pay, of more than $150 per barrel. If we start from the fact that refining, transport, and distribution costs aren’t high, let’s say around $20 per barrel, we can conclude that the European Treasury retains a minimum of $100 per barrel, while the producer, who actually sells an asset and sacrifices a nonrenewable resource, has to be satisfied with $30—scarcely 20% of its European value.
As for cooperation with environmental movements, there’s no doubt it’s been a complete success, since oil has been punished with all kinds of possible taxes, thus diminishing its consumption, while coal hasn't been touched even with a feather, arriving at the absurd situation where it’s even being subsidized in some countries by taxes on oil. The consequence of such disparity in treatment can be seen in International Energy Agency statistics, which indicate that in 1973 oil accounted for 44.9% of world fuel consumption compared to 35.3% in 1996. Coal consumption in 1973 represented 24.8% and had maintained the same percentage in 1996.
Despite the fact that the figures mentioned above show clearly that only through geopolitical instruments like OPEC can existing injustice be reversed or at least cushioned, in Venezuela privatization has not only been preached until the beginning of 1999 but it has also been partially achieved through Apertura Petrolera (Oil Opening).
Another trick was to egg us on to believe that the solution lay in increasing the volume of production, even though the price was $8 per barrel, 5 cents for each liter (less than bottled water), a price that hardly covers the costs of extraction. Pressures to increase production were so intense that they continue even today, when we see important representatives of our local academe propose a weird thesis, according to which if Venezuela produces 3 million barrels of oil per day and sells it at $30 a barrel, we will find ourselves in the immoral grip of living on rents whereas, if, on the contrary, we produce 7 million barrels a day and sell it for just $7 a barrel, it would reflect an immense and praiseworthy productive effort.
Finally, with respect to OPEC, we can only say it has just saved itself from extinction—for the time being.
With this on record, who can doubt that, in fact, I have produced enough material to inspire a thriller script? If anyone out of curiosity wants to know what the imaginary Kohlenweiss fifth pillar was in the hope that (as my daughters say) recounting a nightmare makes sure it will never happen, I confess that recently I have been waking up each morning bathed in nervous sweat, fresh from the nightmare that the EU has plotted to plant an environmental extremist in the White House.
From El Universal, Caracas, August 3, 2000