Oil's Nationalization & Geo-Political Turbulence

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Matt H

It all depends on Norway...

Top Gas Exporters don't fare much better

In Venezuela, oil generates 80% of the country's total export revenues and contributes 50% of total government income. It's little wonder that Hugo Chavez wants to establish control over this key resource. Imagine if this were the scenario in the U.S. and the U.S. Congress were looking for new sources of revenues to fund social programs like Social Security or Medicaid -- isn't it likely that Congress, always fearful of hiking taxes, would, look to a great money-generator such as oil for a few extra dollars?

Geo-political turbulence, and in particular the prospect of "energy nationalism" among top producing oil and gas countries, can introduce significant risk and opportunity for investors. The tables to the left, compiled from EIA and Transparency International data, demonstrate the real risk that the world runs every day it keeps pumping oil and gas. The rank is awarded by Transparency International for the country's "perceived corruption", where a rank of "1" indicates the world's least corrupt country (Finland, by the way), and a rank of "163" indicates the world's most corrupt country (Haiti, which unfortunately has limited natural resources on top of it's corruption problem).