A Bolivian tin teapot, no less. After looking at some numbers, it becomes apparent why Bolivia's Evo Morales wants to rocket the country back into the cocaine business. Get out your calculators. You won't need a scientific or accounting type calculator, the little one your 10 year-old uses will suffice.
Bolivia's natural gas reserves, proven, probable and possible, total 80 trillion cubic feet. The wellhead price for natural gas closed at the end of December at $6.65/thousand cubic feet.
The wellhead price is the cost that buyers must pay the company that owns the extraction rights for the gas, usually by means of a long term lease won in open bidding against other extractors -- the big energy companies. The way this is done in the civilized world is that the company that owns the rights to the well pays the owner of the rights to the gas, in this case Bolivia, a royalty for every cubic foot of natural gas removed from the well.
I've done a lot of checking and I cannot determine the royalties currently being paid to Bolivia by the European energy companies which have extraction rights today. However, in the United States, the federal government charges between 12 and 16 percent of that well head price for royalties. Admittedly, these royalty deals with the companies that remove natural gas from US wells are sweetheart deals for the big energy companies. And they have been for more than 100 years of oil and gas exploration, drilling, pumping, refining, wholesaling and retailing. That's the way it has always worked in America.
But Bolivia does not necessarily have to play by those rules. Let's say that Bolivia demands and can receive, oh, 20% royalties on the wellhead price for Bolivian natural gas. Therefore: .20 x 6.65 = $1.33/thousand cubic feet.
What does this represent in dollars to the Bolivian government?
80,000,000,000,000/1000 x $1.33 = $80,000,000,000 (80 billion dollars).
And what does this represent in dollars each to the 8.6 million Bolivian citizens?
$80,000,000,000/8,600,000 = $9,302.00 per person. Period. That's it. They'll be all out of gas.
And that is only if Bolivia could somehow wave a magic wand or snort enough coke to extract all that gas in the next year. Or in any year, for that matter.
If Evo could hand out $9,302 to each and every living Bolivian citizen this year, it would be more money than 95% of Bolivians had ever seen, much less held in their hands, at one time. Whoopee. And what would Evo do next year for an encore? There ain't no more gas. Bolivians, after only one year of mere grinding poverty, would slide back into abject poverty, right where they are today, except sans natural gas.
Of course, the above example is not how it is supposed to all work. The way it is supposed to work is that Bolivia signs leases with the energy extraction companies and begins collecting $1.33 per thousand cubic feet of gas removed from its sovereign dirt. Then, the government invests that money in schools, teachers, technology and infrastructure to attract foreign investment. That means jobs, incomes, taxes, lifestyles etc.
It shores up its executive, legislative and judicial branches to protect those foreign investments, leading to more foreign investment. That means more jobs, higher incomes, more taxes, better lifestyles etc.
The World Bank and the United Nations and the International Monetary Fund and the New York Yankees all get a big warm and fuzzy and loan the country even more money - well, the Yankees wouldn't loan them one red cent but might consider playing a game or two there in their lavish new national stadium, named, appropriately, Evo Ravine. Try saying that 3 times as fast as you can without bursting into laughter. Yankees or no, that all means even more jobs, even higher incomes, even more taxes, even better lifestyles etc.
That's the way it is supposed to happen. But that's not the way it's going to happen.
First of all, the Bolivian Gas War in which Evo was a leader and which drove two consecutive Bolivian presidents from office was over the demands by a minority of the people that Bolivia sell no gas at all. Forward looking leaders such as Evo realized that Bolivia has gas reserves sufficient for its own uses that will last 2000 years.
Now, thinking outside the box, geniuses like Evo have decided it would be better for Bolivians to remain in abject poverty (as opposed to the ever so much more attractive grinding poverty) by refusing to sell their natural gas; for 2000 years.
2000 years - Time since the birth of Jesus the Christ, approx.
2000 years - The length of the pharaohs'' rule in ancient Egypt, approx.
2000 years - Four times the length of the Roman Republic, approx.
2000 years - Four times the length of the Roman Empire, approx.
2000 years - Double the length of total Roman rule, approx.
2000 years - The age of the Dead Sea Scrolls, approx.
2000 years - The sum total of the years of persecution and murders of Jews, which began in 70 BC with the murder of 1 million in Jerusalem by the Romans and continues to this day in, well, just about everywhere, approx.
2000 years - The age of the necktie, first worn by China's emperor Shih Huan Ti, approx.
2000 years - The age of the universe's oldest known supernova, approx.
2000 years - The age of Bam, Iran's ancient city, when it was destroyed in the earthquake of December 26, 2003, approx.
2000 years - The time since the completion of China's Great Wall, approx.
2000 years - The age of what was originally a Roman camp, now Bonn, Germany, approx.
2000 years - The length of time between the last enshrinement of ashes and bones of Lord Buddha and the latest, in Mumbai (formerly Bombay), India, October, 2006, approx.
2000 years - The head start the Chinese had over the Italians in making pasta, approx.
2000 years - since the Persian empire under Cyrus was more respectful of women's rights than are the Iranians of today, proving that not only the Bolivians are capable of advancing backwards, approx.
2000 years - The history of the Ugyhur culture which China is attempting to erase forever, approx.
2000 years - Since the construction of the Fort Ancient mounds by the Hope-wells in Oregonia, Ohio, approx.
2000 years - Since the last known cannibal feast in the British isles, approx.
2000 years - The head start Cyprus winemakers had on everyone else, including the haughty French.
2000 years - Since ginseng root recipes first appeared in a Chinese medical journal, approx.
2000 years - Since the development of durable leather shoes by the Chinese, approx.
2000 years - Since the ancient Celts first celebrated the Samhain festival, now known as Halloween, approx.
2000 years - Since the end of the Neolithic, or "food producing" period, when the majority of earth's peoples switched to farming, rather than hunting, approx.
2000 years - Since Hippocrates said, "Ars Longa, Vita Brevis," which means, "Bob Knight will win at least one more NCAA championship," approx.
Evo will go ahead with his plans to nationalize the gas fields. Foreign investment, already only a trickle compared to what it was just 10 years ago, will completely evaporate. But Evo will discover that he has to sell gas. Bolivia has nothing else that anybody wants except, of course, coca paste. Evo's socialist government will skim off every penny it possibly can from the gas sales (Hello? PEMEX?) leaving no money for simple maintenance, let alone exploration.
The Bolivian population, believing that Evo has come to save their day, will demand every penny in free, sub-standard education (Hello? Mexico?), free, sub-standard medical care (Hello? Mexico?), low cost, sub-standard and downright dangerous public transportation (Hello? Mexico?) and thousands of kilometers in poorly designed, poorly built and poorly maintained roads, bridges, tunnels and airports (Hello? Mexico?), among a host of other freebies supported by natural gas sales cause there ain't nothing else. Except, of course, coca paste.
And when the whole thing comes crashing down, Evo will get tossed out of office by angry mobs in the streets, just like the last two Bolivian presidents. And the Bolivians can start all over again with a new populist (read; socialist) leader who promises them all manner of things that he cannot possibly deliver; not today, not tomorrow, not ever.
for art, gifts and collectibles -- all hand made
by Mexican indigenous artists.
Thanks!
Cross posted at Pale Horse Galleries
TAGS: Oaxaca, Mexico, Oaxaca teachers strike, Pale Horse Galleries, gifts, collectibles, Mexican arts and crafts, Evo Morales, Bolivia, Hugo Chavez, coca, cocaine, natural gas, Bolivian gas war, Bob Knight
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