State-Owned vs. Multinational Oil: New Rules for Market Intervention
Energy markets, unlike financial markets and other goods and services, are more generally characterized by substantial government intervention. The energy sector is dominated by companies that either had or still do have substantial support from national governments. Beyond the formal state-owned sector, private energy companies have always been under scrutiny and or control by government given the importance of providing reliable supplies of ‘essential services’ and energy security to a country’s people and businesses. This aim of governments has meant that domestic energy policy impacts on foreign policy in a number of ways, including escalating fears regarding resource nationalism when oil prices are volatile.
This paper provides an overview of existing research on the outcomes of government ownership and intervention in the energy sector through the example of state-owned oil companies as they compare with their so-called private sector counterparts. The purpose of this analysis is to improve the competitiveness of the energy sector while settling exaggerated fears regarding the negative eff ects of energy nationalism on the security of supply to other countries. This paper builds on work of the EastWest Institute beginning in 2005 on promoting confi dence, trust and cooperation in global energy security.
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