2.2.3 Neutrality
Neutrality factor occurs when a fiscal term provides the smallest disruption on economic decision (Daniel et al. 2008). In a neutral fiscal regime, investment decision will not be affected regardless of the tax term (Nakhle 2008). In other words, the decision making process is not interfere by the fiscal system. Thus, the pre and post-tax ranking have equal investment outcomes (Tordo 2007). Furthermore, Tordo (2007) also adds that neutrality provide economic efficiency, since it does not impact allocation of resources.
In relation with petroleum extraction project, neutrality helps government attracting investor for marginal field development (Nakhle 2008). Moreover, Daniel et al. (2008) state that in petroleum industry,
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Figure 2.3 also shows that contractual system can be divided into service contract and production sharing contract (PSC). Nakhle (2008) states that concessionary and contractual systems represent the basic relationship pattern between governments and investors. Moreover, Mommer (2001) explains that concessionary system provide stronger position for investors, on the other hand contractual arrangement give bigger power for governments to control their resources exploitation and production. The next section will explain the general terms and explanation of concessionary and contractual system, including more detail explanation about Indonesia’s …show more content…
Bindemann (1999) states that Indonesia is the pioneer in PSC’s system in its petroleum arrangement. The first PSC arrangement in Indonesia goes back to 1966 when Permina (now Pertamina) as National Oil Company (NOC) act as the contractor (Johnson 1994). According to Le Leuch (1988), PSC system is made due to political motivation in order to make the government remains the land owner, and company as the contractor.
In addition, Bindemann (1999) also describes that PSC is successfully introduced in Indonesia because of increasing nationalistic feelings after Independence, hence government refuse new contract for concessions system and foreign companies became the target of criticism. Moreover, Barnes (1995) also argues that government use this opportunity to access the oil, as well as, breaking the dominance of foreign big oil companies. Over the time, PSC has spread globally and used in many countries, especially the emerging countries in Asia and Africa (Mazeel
In conclusion, Oil impacted social change over time, which helped us grow as a society. If you took my proposal into consideration I would really appreciate it. My proposal is going to have all of the factors of Oil and how oil has change our state. After reading the documents that you have given me I was able to answer question “What story should be told”. As H.L hunt always said “money is just as way of keeping score”. - H.L
This paper will discuss the effects of Keystone XL Pipeline project and how the findings of the research might be beneficial to the United States. The first point of argument will be the negative impact of the Keystone Pipeline to America’s economy and the environment. The second point of view will be the positive impact of Keystone Pipeline to America’s economy. Keystone XL Pipeline is TransCanada’s tar-sand transportation project. The pipeline is supposed to cut across America to be linked with Canada’s tar-sand mines. It is aimed at increasing energy security in America. However, the project has received a lot of criticism from both the citizens and environmentalists for climate reasons (Mendelsohn and Dinar 154). To understand the implications of Keystone XL Pipeline, it is important to look at its environmental and economic impacts to the United States.
OPEC is an unstable cartel representing the same interest of the major players in the oil exporting nations. It had its time when it has been effective in raising up the price of oil allowing the member nations to obtain a significant amount of premium collected on behalf of their sovereigns for the cartel and to their loyalty. The essay summarizes a cause and effect that focuses on 2 sets of connection; the first is focused of OPEC’s lack of efficiency or formal mechanism of scoping the conflicts along with its members which result in consequences that affect the oil depended industry as the transportation industry, or the aviation companies making them highly vulnerable. Second set focuses on the results of the OPEC’s mismanagements and concerns for their finite oil reserves, which in the other hand triggers new market for new developments in discovering alternatives to oil.
Everyone has their own political leaning and that leaning comes from one’s opinion about the Government. Peoples’ opinions are formed by what the parties say they will and will not do, the amounts they want spend and what they want to save. In macroeconomic terms, what the government spends is known as fiscal policy. Fiscal policy is the use of taxation and government spending for the purposes of stimulating or slowing down growth in an economy. Fiscal policy can be used for expansionary reasons, which is aimed at growing the economy and increasing employment, or contractionary which is intended to slow the growth of an economy. Expansionary fiscal policy features increased government spending and decreases in the tax rates as where contractionary policy focuses on lowering government spending and increasing tax rates. It must be understood that fiscal policy is meant to help the economy, although some negative results may arise.
Unocal, an American based oil company, provides complete oil field operations from agreements, extraction, refining, marketing and distribution. Unocal also owns a chain of Union 76 gas stations (Velasquez, 2012). In the 1990’s oil field extraction in the U.S. began to dry up and Unocal was in need of new investments. Unocal’s ability to take a project from start to finish made them favorites to foreign countries. Burma, governed by a military dictatorship, sat on a gas reserve called Yadana Field, which will provide 30 years of revenue for the country (Velasquez, 2012). In order to tap into this lucrative reservoir, Burma needed to develop some agreements with foreign counties and businesses. The overall project included drilling, and building
The reduction of government role in the economy will affect fiscal policy by decreasing deficit spending a...
The oil & gas sector faces specific risks affecting its financial performances. The main variables affecting the industry are political, geological, price, fiscal, supply and demand as well as cost risks. Given the specific risks, the demand for energy is still gr...
Oil price and investor interest can have a significant impact on the success or failure of oil production ventures in Alberta. With the cost of production remaining relatively stable it is the primarily the price of oil that determines the profitability of the oil industry in Alberta and investor interest. In this situation the price of oil and investor interest are intrinsically linked. Advocates pro utilization of this vast and largely untapped resource have assumed that oil prices will remain stable when evaluating the future viability and potential investor interest in the Alberta industry. However, assumptions such as this can be disastrous if they are without sound basis.
Contractual agreement has always been viewed in terms of offer and acceptance. The universal principle to contract law has always been parties may get into an agreement in whichever way they deem fit and they are subject to certain terms as they choose. As far as legal requirements vital to their formation are binding contracts may be formed. Moreover a binding agreement may be manifested in terms of writing or in verbal form.
After analyzing the data and the theory, we have provided our conclusion weather tax cut is better for the stimulation of growth or Government spending is? This report explains the big macroeconomic debates of the present times. It seeks to explore the debate within fiscal policy itself between tax cuts and government spending. We have tried to explain the argument through some theories and through some data collected from Indian econ...
In order to fully understand the Wests urge of control over Middle Eastern oil, one must recognize the forms that those energy resources come in; given the importance of oil in almost everything produced, controlling the basic component would significantly affect the market. Petroleum products, in all of their forms, are used in four major sectors: transportation, ind...
A contract is an agreement between two parties in which one party agrees to perform some actions in return of some consideration. These promises are legally binding. The contract can be for exchange of goods, services, property and so on. A contract can be oral as well as written and also it can be part oral and part written but it is useful to have written contract otherwise issues can be created in future. But both the written as well as oral contract is legally enforceable. Also if there is a breach of contract, there are certain remedies for that which are discussed later in the assignment. There are certain elements which need to be present in a contract. These elements are discussed in the detail in the assignment. (Clarke,
...based energy system at the expenses of energy resources. The complex geopolitics required Indonesia maintaining a relative stable international relationships with its allies by long-term energy supply. Through multilateral cooperation, Indonesia can easily upgrading its energy industry by setting up hydro plants and thermal plants instead of its coal plants. Importing equipment and hiring skillful experts from advanced country contributes to Indonesia auto research and management innovation in energy sector. An improvement in energy producing efficiency can great alleviate energy poverty and cut carbon dioxide emissions and to some extent better management in energy consumption.
OPEC is an oil producer’s association founded in 1960 by Islamic Republic of Iran, Iraq, Kuwait, Saudi Arabia and Venezuela and curently consisting of 14 members, including the organisators and Qatar, Libya, the UAE, Algeria, Nigeria, Ecuador and Angola(OPEC Statute, 2012). According to the OPEC Statute, the main objective of the organisation is «the coordination and unification of the petroleum policies of Member Countries and the determination of the best means for safeguarding their interests, individually and collectively»(p1, 2012). The organisation is frequently classified as a cartel(Bobrow&Kudrle, 1976; ) and therefore, its main aim can be simplified to the maintenance of the market price for oil at the level which would suit its members(Willet, 1979). The degree of the OPEC’s power in the oil market varied over time; it was regarded as the only significant player on the world oil market(Bobrow&Kudrle, 1976; Rewarding, 2004) and as an organisation «dissolving away»(Chopra, 1982) but even now - after 54 years from the creation date - collective production of all the members accounts to 45% of the global market share(Rose, 2004) and OPEC members hold 81% of the proven global oil reserves(OPEC webpage). The aim of this essay is to analyse the extent to which OPEC can be called an effective organisation. This will be done through the analysis of the OPEC’s ability to resist the main problems faced. In the first part of the essay OPEC will be analysed as a cartel with issues of price determination and possible cheating discussed. Also, the role of wealthy members in solving the problem of collective action will be overviewed. The second part of the essay will consider the threats that are posed by the conflicts inside the organ...
The oil industry has, however, interfered somewhat in the development of alternative industries. In addition, even though it is directly associated with problems in leadership, corruption has been established as a normal order of business in Nigeria’s government and dealings with oil and has grown along with the industry. While the oil industry has introduced many significant problems in Nigeria, both socially and economically, there is still promise in what it can provide for the nation while oil remains in abundance. There are some positive examples across the globe of natural resources acting as an impetus for constructive change and development.... ... middle of paper ... ...