Sunday, March 30, 2008

The Kingdom

So I have now watched two depressing movies for this course.  First of all, I guess I really should have read the plot before watching the movie (The Kingdom). As someone whose father is currently in Iraq, the whole attack in the beginning was not so great for me.  I like to think that when he's in the compound he's safe...

The one part that really stood out for me was when they asked "who is paying for all these palaces?" and someone answers "Exxon... Chevron.."  It's interesting because in my Friday class (International Petroleum Concessions and Agreements) we talked about tax structures.  In the US, there are local and federal royalties.  With this system, money goes to the government, but some of the money is also guaranteed to stay local.  One of the problems in places like West Africa is that all the royalties go to the government.  For example, money from production in the Niger Delta can all go straight to Abuja.  None of it is required to stay where the production is which doesn't go over so well with the locals.    I would also like to say that the oil companies have very little say in the tax structure in these countries.  They can negotiate rates, but cannot guarantee where any of the money will go.  I think it is an unfortunate, complicated, and highly misunderstood topic.

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