Private Resource Development and Public Utilities: Some Hazards of Sleeping with Elephants

Abstract

This chapter focuses on some political dimensions of the risks faced in the resources sector, and in particular, on the risks associated with the expanding role for electricity utilities induced by a rise in the relative price of oil. The examples discussed, while largely Australian, have relevance to the world-wide debate on the role and growth of state enterprise. The oil industry, while subject to a great deal of government intervention, is largely private in its exploration, development, and distribution dimensions. On the other hand, electricity production and distribution is typically state-owned, or where privately owned, as in the USA, subject to price or rate-of-retum control by various regulatory agencies. The scale of hydroelectric projects, for example, has made them obvious candidates for state ownership, and the more recent expansion of nuclear-based power stations has also given rise to a large role for the state, partly because of perceived radiation risks associated with nuclear power and the view that these risks are better handled by state agencies.