Oil Troubles

Ecuador's troubles with Chevron/Texaco continue. Ecuador has asked the US Justice Department to investigate their allegations of 'fraud and deceit' in matters regarding the contamination of the Amazon region in Ecuador. Ecuadorian lawyers sent a report to US officials claiming that Chevron, which inherited the dispute when it bought Texaco, of misleading and lying regarding its clean-up efforts of the site where Texaco pumped oil from 1964-1992. Chevron claims that it has already fulfilled the commitments set forth in their 1995 agreement.

The Chevron/Texaco dispute comes at a time when Ecuador is already entrenched in a dispute with Occidental over a violation of its contract to pump oil. While many are upset at the idea of Ecuador joining OPEC, it seems understandable that they would look for alternatives to big oil companies after enduring these disputes and issues.

I recommend reading the San Fransisco Chronicle article linked above and here.

Timmy Video - DePauw trip

First I want to apologize for a lack of posting recently. Pablo and I are both in the States right now, but we will pick it up a bit soon here.

Brandon Morrical, a student from the DePauw trip, put together a really good video of their October trip, and I encourage everyone to check it out. You can find it searching YouTube or just click here.

A New E for OPEC ?

A recent Reuters article states that Ecuador, as well as Angola and Sudan, may join OPEC soon. A recent skirmish with the US company Occidental has left many in Ecuador wondering about the best way to utilize their oil resources, and some seem to be turning towards OPEC as a possible solution.

Oil is incredibly important to Ecuador accounting for 20% of government revenues and 40% of total exports, according to the World Bank. Therefore, it is important for Ecuador to maximize their potential and how to manage the resources is no trivial deal.

However, the money made from oil in Ecuador may not be utilized to its full potential. The World Banks says that the flow of revenue from oil in Ecuador lacks transparency and is commonly mis-allocated (see Comparative Study on the Distribution of Oil Rents in Bolivia, Colombia, Ecuador, and Peru). This is a common phenomenon in developing countries; despite abundant natural resources, they are unable to take advantage of them and turn their economies around. This is called, "the natural resource curse". As in Ecuador, the abundance of natural resources frequently increases income inequality.

Many in the US are concerned as they will have less influence in the oil production if Ecuador joins OPEC and ceases to rely on US companies. Topped with the recent win of Correa, people are eager to say that Ecuador is merely following Venezuela and point to this as evidence that Chavez has real influence in the country. Others, however, see this is a logical movement for Ecuador especially after their conflict with Occidental.

At this point, no one can be sure how this will play out. Hopefully it will be to the benefit of Ecuador, its economy and its people.