Beyond the Horizon Sharing proceeds fairly

Sometime ago, I was speaking with an oil operator who had just obtained a concession in a country where there was increasing anti-American tension among the citizens. The operator was afraid for his safety in that country. In that conversation, it dawned on me that firms operating in foreign countries ought to do more in relating with the common people.

Why is it that every so often there are cyclic government changes throughout the world? First, the right wing takes power and preaches free market capitalism, but for whom? Most international operators will agree that most of the wealth of free market economies in developing countries goes to a select few - generally people who are associated with government officials.

We oil companies strike concession contracts with the government giving them considerable revenues, but where does the money go? How often have you heard of secret bank accounts for government officials? I remember trying to find a "poor" government minister to sign a contract, going from his one palatial mansion to another. On top of this, how often are we approached for bribes?

With oil companies feeding the government officials and the officials often feeding themselves, who is looking out for the masses? Please know that I am not implicating all governments, but even the best of governments have great difficulty in serving their poor, who often comprise the vast majority.

History has shown that when all the resources go to a select few, then the people revolt, and both the government and the oil companies become expendable, because they have given little back to the people. Also, history has shown that the pendulum swings one way, then another.

To counter the right wing, the left wing rebels seek to overthrow the government. What do they have to lose? So, they take power and throw out the exploiters, nationalize and place the state in control of everything.

Yes, we are in a free market revival in the world, but how long will this last if we just take what we can while the opportunity presents itself? Instead of the swinging right wing-left wing politics, it's time we try for the center.

Yes, we want to get a return on our investment, but everyone must benefit. Opportunities must be made available for the people at the bottom as well as the. top. Unless we become more socially responsible, we will become expendable.

The other area of concern is the environment. Oil companies sit on one fence and sling mud at the

environmentalists, and they do likewise. We have to endure excessive environmental regulations and deal with the constant harassment and opposition from citizens and local and federal governments, not to mention constant litigation from environmental attorneys. How did this situation get so divisive? Why are all these people trying to do in the "big bad oil companies?" It is my belief that it's the old pendulum again.

For decades, oil companies developed oil fields with little regard to the environment because there were no regulations. Now, we are suffering the backlash. The pendulum has swung the other way. Thus, many of us have gone overseas. Can't we learn from history?

If we repeat the same mistakes of the past, we will get the same results. It does not take a great deal of intelligence to realize that unless international operators moderate, the environmental effects of what has happened in the US will take place there. The writing is on the wall - look at the growing opposition to oil developments and the lawsuits, such as what is taking place in Ecuador. We cannot wait for the governments to impose regulations. We need to take measures to regulate ourselves.

Now, don't get me wrong - I am no socialist or radical environmentalist. I am all for self-interest, free markets, making money, and the like. It is in one's self-interest that we must look beyond our own nose. What has occurred in the past will repeat itself, unless we learn our lessons.

What goes around comes around. If we exploit, then we ourselves are exploited. Let us stop the pendulum. When the pendulum swings, then it fuels the fire of discontent, and it fills the rebel guerrilla or the environmental lawyer with anger. Then, we must fight.

Let us do something really radical - work together in the development of resources in a responsible way by working with all parties concerned, and sharing the proceeds fairly.

William Divine
President, Petroleum Foundation of America

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