ABSTRACT

Petroleum exploration and development are being conducted in most of the world's nations -- in some by private companies, in others by government organisations, and in many more by some combination of the two. The relative degree of success of private and government organisations is difficult to assess, because many nationally owned enterprises are new, and therefore have an inadequate record of accomplishment that would provide a basis for comparison. In general, it appears that private-company exploration, discovery, and exploitation are much more successful than the same operations conducted by governmental groups. This appears to be true for several reasons, one of which is the climate of competition that exists where private enterprise is encouraged. However, political pressures are not so prevalent in private, competing companies as they are in government organisations. The great political pressures within government seem to nourish huge, bureaucratic establishments and engender conservative attitudes, thereby fostering a reluctance to take high risks. Such conservatism stifles the bold imagination required for badly needed economic development. In fact, the historical record that does exist indicates that the three principal requirements for exploration success -- adequate capital, expertise, and dedication -- are far less prevalent among government petroleum organisations than among those of the private sector.

On the reverse side of the coin, unrestrained private enterprise can generate abusive and wasteful practices that are not in the public interest. Furthermore, government companies can and do, in many countries, serve very useful functions. Among the more obvious is that of keeping the price of energy low for preferred uses. Cheap energy, in turn, stimulates industrial development and, in underdeveloped countries, permits the growth and expansion of a large, nationally based supply of manufactured goods which more people can purchase, thereby raising the standard of living. The low prices also enhance the value of exports on the world marketplace and this enhancement, together with the cheap, nationally produced energy, keeps the balance-of-trade payments low. Still another useful function of a government petroleum organisation is to help provide full national employment.

Today, one finds the private sector of industry under attack in nearly all quarters. Some of the heaviest attacks are in those countries where the private petroleum companies first developed and where they have done the greatest good for mankind. These attacks against the private sector can, in many cases, be attributed directly to the hostile attitudes of a poorly informed public and of equally poorly informed private and public officials. Public education is only a part of the cure for these hostile attitudes. What seems to be more important is to develop a new, long-term set of national goals and national ideals toward which the public, government, and private industry together can strive -- and not to indulge in interminable political rhetoric concerning who did what and to whom.

In conclusion, what is good for one nation is not necessarily good for another. Some countries, to survive in today's world of OPEC-dominated prices, need to

1 CSPG Annual Honorary Address, October 15, 1975. I am deeply indebted to the Society for inviting me to give this address; to John M. Browning, Nowell Donovan, Howard A. Meyerhoff, and Edgar Wesley Owen for criticism, review, and invaluable suggestions; and to Ernestine Voyles for aid and support throughout the preparation of the manuscript.

End_Page 282------------------------

develop self-sufficient, cheap, government-controlled petroleum industries. Others, particularly the industrial nations, need less government control but sensible, enlightened national policies and a climate of freedom in which to operate and grow. Most important, each nation needs its own set of long-term national objectives and ideals for which each group -- public, government, and private -- can work and give full support.