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Comment by former Shell executive Paddy Briggs: For once I (sort of) agree with Jeroen

For once I (sort of) agree with Jeroen

(Little hope oil summit will cut prices: Shell CEO Jeroen van der Veer: June 22, 2008)

The leaders of the West in their doomed mission to Saudi Arabia cannot find a solution to the current exceptional price of Crude Oil. They are wasting their time. It always pays to follow the money when seeking an explanation for any phenomena and in the case of the oil price the money accrues to two groups of players – neither of which, whatever they may say, wants oil prices significantly to fall back again. The Oil producers in OPEC (most of whom have supply which way exceeds their inland demand) are more than happy to rake the moolah in.

The Saudi regime has always run on the premise that oil revenues will just keep on rolling in – whatever they do. There has been the odd blip, but in the main the dollars continue to accrue to the ruling regime to keep them in the style to which they have become accustomed. More important that fuelling the excesses of palaces and princesses is the fact that the more the House of Saud has in the coffers the more they can invest in arms and the armed forces to keep the “militants” at bay. There hasn’t been a significant attack on the hegemony of the ruling Saudi family for some time and there can be no doubt that the secret police and the rest of their repressive internal security apparatus is keeping the dissidents at bay. (To those who think that these dissidents are just the Al Queda mob it is worth remembering that there is also a brave group of pro democracy Saudis who are victimised just as much as the Islamic extremists).

Give or take a billion or two for the Saudis the more dollars the merrier. And every dollar enhances the power of the Saudi rulers and puts in peril the prospect of a real accommodation between the West and Saudi Arabia under which the West’s oil thirst will somehow assuaged by Saudi “gentlemen” at a reasonable price. (1) They ain’t gentlemen. (2) There is no incentive that the West can offer that would really cause OPEC, the Saudis and the rest, to do anything to reduce the oil price.

The second group for whom higher prices make happy days are the Multinational Oil giants. ExxonMobil, Shell, BP and the rest. They will protest otherwise of course. But the exceptional levels of profits that these Corporations have made in recent times are entirely attributable to the phenomenal increase in the price Crude Oil. At the recent AGM of Royal Dutch Shell one of their Non Executive Directors, Sir Peter Job, justified the unprecedented remuneration of Shell’s executive by reference to Shell’s record profits. Of course these profits had little or nothing to do with the efforts of the directors and everything to do with the increases in the oil price. But the Shell executives approaching ten million dollars per annum in income (or more) won’t be arguing about that too much. The cause and effect is clear. High Prices lead to high profits. High profits lead to high director remuneration. QED – ’tis in the interest of the high priced help in Shell (etc.) to keep the oil price high -whatever they may say!

So that’s the story really. The West may winge and ache at the effects of $135 oil – but the people who might be able to do something about it (the OPEC producers) have no real incentive to do so. And the top executives of some of the US and Europe’s biggest oil companies flourish when the oil price is high. Gordon – you need to understand this my friend!

The article: Little hope oil summit will cut prices: Shell CEO Jeroen van der Veer: June 22, 2008

http://royaldutchshellplc.com/2008/06/22/little-hope-oil-summit-will-cut-prices-shell-ceo-jeroen-van-der-veer/

Paddy Briggs

About Me

“I can’t be sacked, you see, because I haven’t got a job. Therefore I’ll continue to say whatever I like” Harold Pinter 1993 

Paddy Briggs worked for Shell for 37 years during the last fifteen of which he was responsible for Brand management in a number of appointments. He was the winner of the “Shell/Economist” writing prize (internal) in 2001. Paddy retired from Shell in 2002 to form the brand consultancy BrandAware ™ and to write and speak on brand and reputation matters. 
Paddy is active as a director of training courses on brand and reputation management. 

Paddy is also a sports journalist and a member of the “Sports Journalists Association” and the “Cricket Writers’ Club”. He has had weekly columns in the “Bahrain Tribune”, the “Khaleej Times”, the “Emirates Evening Post” and “Ameinfo”. He is currently working on a commission to write the biography of the Kent and West Indies cricketer John Shepherd

Paddy’s book of light verse “Jumeira Jane”was published in Dubai in 2001 and the first edition print run of 5000 copies was sold out.

 

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