Brazil is sitting on billions of barrels of oil, and it doesn’t want to let foreign companies have a crack at it, the New York Times reports in a long article that looks at Brazil’s nationalization plans.
When Brazil discovered it had tens of billions of barrels of oil off its coast, it “won the lottery,” says José Sergio Gabrielli, president of Brazilian oil giant Petrobras. Why on Earth should it let some foreign company pull the oil from the ground? Gabrielli thinks his company should be in charge of operations, with some investment from foreign companies.
With Petrobas pulling the oil, it will earn the most revenue, which the government will distribute to its impovershed citizens. Brazil swears up and down that it won’t turn nationalistic like other latin countries, but there’s widespread fear in the nation that letting Petrobras control the oil supply is a bad idea.
Brazil had nationalized oil as recently as 1996. It didn’t work so well. So Brazilians are wary. Also, Petrobras is presently facing investigations from the Senate for misconduct.
For now, it’s still up in the air, but this will be interesting to keep an eye on. The number one reason for predicted oil spikes, as near as we can tell, is collapsing production. The problem seems to be government interference more than physical constraints.
If Brazil’s oil production gets screwed up it could have far reaching effects.
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