The hard core of the state-owned sector are the national oil companies: the 13 giants that control more than three-quarters of the world's oil supplies. Governments continue to keep a heavy hand on this industry. The Chinese state owns 90% of the shares in PetroChina and 80% of those in Sinopec. Even so, the national oil companies are being transformed by the same forces that are transforming the state-owned sector in general.A separate article, A choice of models: Theme and variations, notes that these state oil companies tend to be very influential on their governments:
A few companies preserve the great tradition of state-sponsored incompetence and overmanning. Venezuela’s Petróleos de Venezuela, which is central to the patronage machine of the country’s president, Hugo Chávez, is an obvious example. More surprisingly, so is Mexico’s Pemex, which has successfully resisted numerous attempts to reform it. Malaysia’s Petronas has improved dramatically over the past five years. Saudi Arabia’s Aramco, which controls more than a tenth of the world’s oil and with it the fate of the world economy, is almost as well managed as private-sector oil companies such as Exxon Mobil. The Saudi monarchy has slimmed the company’s workforce, brought in professional managers, contracted out ancillary work and formed alliances with international companies. [my emphasis]
State-owned energy companies arguably have more influence over energy policy in state-capitalist countries than private energy companies have in liberal countries. Over a drink Russians will happily speculate about whether the Kremlin runs Gazprom or Gazprom runs the Kremlin.It's nice that the reporter had drinks with people in Russia who he was talking to about Gazprom. But one must wonder whether the use of influence is nearly so one-sided as this brief statement implies. Those naughty state-owned oil companies are even more influential on their governments than the private ones in Britain and the US! Jamie Galbraith once wrote something to the effect that the Cheney-Bush Administration was basically the energy industry invested with state power. Since much of the other reporting talks about ways that the state in these various arrangements has significant effects on these enterprises, that last quoted argument should be treated with caution. No small amount of ideology is likely expressing itself there.
An obvious question suggests itself here. If three-quarters of the world's oil is controlled by "state capitalist" institutions, what are the implications of that fact? Are there particular aspects of the oil business that make it well-suited for state control of the form they mean? What does that structure of the world oil business indicate about the relative benefits of state versus private businesses in this area, and more generally? This series doesn't really address those issues.
This is a peculiar comment at the very end of that piece.
It is possible for a country to have any or all of these institutions in place without being a member of the state capitalist club. Norway boasts the world’s 13th-biggest oil company by revenue, Statoil, and its third-biggest sovereign-wealth fund, the Government Pension Fund, with $560 billion in assets, but requires both of them to behave like regular companies.Say what? From the Statoil website:
With a holding of 67% the Norwegian state is the main shareholder in Statoil. The owner interest is managed by the Ministry of Petroleum and Energy. The Norwegian state is eager to communicate its expectations to companies in which it has interests, and to communicate to society how the state is to act as owner.This just further confuses the question of what The Economist actually means by "state capitalism". How is a company 67% owned by the government outside "the state capitalist club"? Well, I guess it's because they have to "behave like regular companies." Although what is it about the way Norway does it that puts them outside "the state capitalist club" versus how the club members do it is not discussed. So these other companies are state capitalist but not the one that is 67% government owns and whose website tells us, "The Norwegian state is eager to communicate its expectations to companies in which it has interests, and to communicate to society how the state is to act as owner."
The Norwegian state emphasises that state-owned companies must comply with principles for good corporate governance.
Yeah, I'm clueless about how that works, too.
Tags: state capitalism