Oil : A Long Standing Territorial Dispute

Venezuela’s reputation has been well established regarding its supply of oil and how it was being used for medicinal use and other purposes. It was not until the first oil well was drilled in 1912, when Venezuela became the world’s second largest oil producer behind the US, and the world’s largest oil exporter (Wilpert, 2003). With the well drill in the country it attracted many major oil producers that wanted a piece of anything they could get. The Royal Dutch Shell and Rockefeller’s Standard Oil became the main producers of the oil and maintained a high status. Everything was going great for the company, “ between 1920 and 1935 oil share’s exports went up from 1.9% to 91.2%”(Wilpert, 2003), but not everything goes according to plan. The country had a dramatic impact towards its economy that many recall, “The Dutch Disease.” “The utmost important magnitude of the Dutch Disease was that agricultural production declined to almost nothing and the country fell behind in industrializing, relative to other Latin American countries” (Wilpert, 2003). Thus, Venezuela had passed a reform oil policy that was the Hydrocarbons Act, which was from the oil revenues based on the income of the mines (Wilpert, 2003), bringing the state’s income to stability.

Within the past years Oil spills have created enormous debates and unhealthy concerns for the ecosystem. On April 22nd , 2010 will be remembered as one of the darkest days in the history of oil and gas industry.

Robert Samuelson's article, "Let's export oil," is a brilliant opinion on the macroeconomic advantages of exporting oil in the international markets and the need to lift the ban on the export of crude oil. The application of new drilling techniques has resulted in an exponential increase in the production of crude oil. This increased production has given us the opportunity to reevaluate our position on the ban on the export of crude oil, because with this new capability comes a responsibility of stabilizing the global oil market as a responsible member of the global community, not to mention our responsibility towards the American people by curbing our import dependence. The author details how this ban is handing an unfair advantage to hostile countries such as Russia and Iran, while severely limiting the options to oil producers in the States, who would eventually reduce, if not stop, new exploration because the ban makes it a less lucrative project which is not worthy of investing time and resources on it. While trying to be fair and balanced, he highlights the risks involved in transporting oil by trains and inadequate pipelines, while explicitly mentioning the environmental worries about fracking. He clearly points out the microeconomic implications by mentioning that the quadrupling of oil prices in the early 1970s led to the ban on oil exports. He understands that persuading the public may be difficult, and that is where political leadership needs to bridge this divide by explaining to the public in the most efficient way possible that despite the risks involved, the gains outweigh the costs.

Oil is and will be the dominant sector of economy in the world for some more decades. It is capable of taking entire countries out of their economic trouble as well as giving them power over other nations. Ecuador, a small country in the north west of South America, began to take part in oil industry about four and a half decades ago. The government started looking for more small petroleum reserves in 2004 without the expectation of finding much. This is why in 2007 it was an enormous surprise when they found one that could help take their “third world country” stereotype away. The only problem is it is located under the world’s most diverse spot on earth. Because of this the government decided to structure a project called Yasuni-ITT to save this precious place. In 2013 this project was canceled since no great support from other countries was shown. Yasuni-ITT was a precise approach to the solution of this dilemma because it prevented an ecological impact from occurring while also allowing Ecuador to advance economically. All of this could had been achieved if other nations would have shown interest in saving the environment.

On April 20, 2010, one of the most horrific accidents occurred in regards to the oil and gas industry. An oil rig exploded not far off the coast of Louisiana. People were injured and even killed. Thick, brown oil gushed into the Gulf of Mexico, destroying beaches and wildlife. Researchers and scientists were forced to find new ways to clean up the oil, in a quick and efficient manner. The immediate and lasting effects of the BP oil spill having caused numerous issues both physically and emotionally. BP has faced consequences for their mistakes and they have since made multiple changes to better the safety and quality of their company to prevent problems like these to happen again. Society should take a look at what happened during and after the oil spill and learn from the experience. I learned a lot about the topic after writing this research paper, and I have a new respect for the people that work in the oil and gas industry. I had no idea how much they risk every time they step foot on an oil rig.

It is well known that in 2010 a oil spill occurred in the Gulf of Mexico. The oil rig Deepwater Horizon, owned by BP, exploded and sank and caused a continued oil leak that released amlost 5 million barrels of oil into the Gulf of Mexico, the worst oil spill in U.S. history (Biello). In an address delivered inJune of 2010, President Obama called the oil spill “the worst environmental disaster America has ever faced” (Obama). Given the magnitude of the spill, and the media attention surrounding the issue, the entire topic became an emotional subject and strong opinions were formed regarding the nature of the spill and the correct way to proceed with containment and restoration. Of the many debates surrounding the issue, one which falls prey

However, the environmental effects caused by the oil industry in Ecuador are not limited to the Amazon region. The construction of the OCP (heavy crude oil pipeline) threatens many of the nation’s other fragile ecosystems. The pipeline, which would connect oil sources in the Amazon with the ocean port and refineries of Esmeraldas on the Pacific Coast, runs over the Andes through various protected areas and reserves and regions of high tourism activity. (OCP alert, 2) The high range of altitudes (up to 6300 meters) of the Andes, through which the pipeline will run, provides fragile and diverse habitats for a variety of plants and animals. Also, the many isolated areas of the Andean region have led to the evolution of an unusually large number of endemic species.

Ecuador loses almost 200,000 hectares of forest each year and has the distinction of having the second highest rate of deforestation in South America. Historically, this can be traced alongside the scale of the oil boom during the past decades and has roots as far back as the rubber boom in 1894.

Although, it hosts some of the most ecologically diverse location on the planet, the nation has risked loss of incredible biodiversity with its host of extractivist practices. In 1967, oil reserves were found in Ecuador’s Amazon region and from then on Ecuador has been extracting and exporting oil. In fact, oil became one of the pillars of the Ecuadorian economy, reinforcing its extractivist presence in the country (Larrea 2013, 2). This extractivism has had unfortunate effects on both humans and the environment. Extractivist practices such as mining or oil drilling are primarily located in ecologically diverse spots such as the Amazon basin, thus the environmental impacts of these activities have often resulted in severe environmental harm such as deforestation, loss of biodiversity, and pollution. Humans are not immune to this harm. In fact, extractivist projects such as drilling often displaces indigenous people (Larrea 2013, 2). For example, the Yasuni National Park has been the home to the Wuaorani people living in the Ecuadorian Amazon area for hundreds of years. Yet with the discovery of oil, came a new area of displacement. The Wuaorani people have been deeply affected by oil activity since the 1970s. For example, the Auca Road and Maxus Road were constructed by big oil companies to allow them access into Waorani ancestral territory for drilling purposes (Swing et al. 2012,

Due to its mega-diversity and natural resources and mild climate, Ecuador’s economy is developed around agricultural products. Oil, shrimp and bananas are the nation’s top export while the manufacturing sector accounts for less than 7 percent of all export. (Worldmark Encyclopedia)

The oil-rich Bolivarian Republic of Venezuela, located on the northern coast of South America, was for many decades considered among the wealthiest nations in the entire continent. While having the largest proven oil reserves in the world has often proved a tremendous boon for Venezuela, the very black gold that has been the cause of its success has also proven to repeatedly be its kryptonite. Over half of the nation’s Gross Domestic Product stems from petroleum exports – which equates to approximately 95% of total exports. It is really not too hard to imagine what drastic consequences shifts in global oil prices could have on the economy.

One of the main features of Ecuador ’s economy is its dependence on only a few key export commodities, most importantly oil and bananas. Oil accounts for approximately 40% of the export economy, while bananas are responsible for about 17%, and Ecuador is the largest producer of bananas in the world. The rest of the economy is mostly based on less important agricultural exports, such as shrimp and flowers, which account for 6% and 4% of exports respectively. Ecuador is almost completely reliant on the success of these few industries, particularly oil, and so has suffered through a cycle of boom and bust economies over the past several decades, since oil was discovered in the 1970s.

The United States has been involved in the affairs of the Middle East for decades and they’ve had various reasons for being there, whether it was to wage war or to prevent outside influence that would undermine their own influence in the region, it always seemed to revolve around one thing: oil. As we all know, oil is a very profitable resource and it’s a huge part of many nations’ economies and because this is the case many wars are fought over this black liquid. The U.S. is no different in that they did just about anything to maintain their access to Middle East oil. As a result, United States actions in the Middle East today has been formed through the decades long desire for their oil.

Deepwater Horizon oil Spill: BP’s drilling platform in the Gulf of Mexico had an explosion in April 2010, causing the “largest oil spill catastrophe in the petroleum industry history”. It caused the death of 11 men and injury to several others. “More than 150,000 barrels of crude oil gushed into the sea, every day, for almost 5 months and up to 68,000 square miles of the Gulf 's surface were covered” (1).

TEMA: IMPACTO DEL COMERCIO SOBRE EL MEDIO AMBIENTE EN LA CAPACIDAD PRODUCTIVA DEL ECUADOR Y SU IMPACTO EN EL MANEJO SOSTENIBLE DE LOS RECURSOS.