Wednesday, May 16, 2007
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How's the diversification thing going, Hugo?
Over at Duck of Minerva, Peter Howard explains why Hugo Chavez's plan to diversify oil exports away from the United States will not work. This bit from a linked Washington Post story was particularly interesting:
During most of Chávez's eight years in office, more than 60 percent of the country's total crude exports have gone to the United States, up from 50 percent throughout much of the 1990s, according to Ramón Espinasa, a former chief economist at PDVSA who is now a consultant in Washington. The trend is due to growing U.S. demand, Venezuela's rising consumption and what oil analysts say is the state's inability to diversify its base of clients to include big consumers.Here's an interesting (and purely hypothetical) question: if Chavez is so gung-ho to nationalize the energy sector in Venezuela, what would happen of the United States government chose to nationalize Citgo? posted by Dan on 05.16.07 at 12:03 AM
I dont think it matters whether it looks like Chavez can succeed in re-routing his sour crude to China or anywhere else (Brazil doesnt like him anymore than we do.) The most important aspect of his blustering is whether his message is getting traction at home. While FOX news may call him a dictator he is still quite popular at home, his intentions play well with the poor (however unfamiliar they are about economics). Whether this populism eventually means Venezuela turns into the next Zimbabwe, the jury is still out. I wouldn't pay much attention as to what he says on the podium, but what deals he tries to cut with foreign companies like Exxon, or Crystallex which would bring jobs to an increasingly impoverished country.posted by: James on 05.16.07 at 12:03 AM [permalink]
We don't have too many Citgos here in Cali, but I sure wouldn't mind if Arco was nationalized, what with their 45 cent charge to use an ATM card and the watered down soda at their fountains. I've drunk my last 44 oz Big Gulp!
And a question -- doesn't the government of these United States *lease* oil drilling rights? Isn't that a form, albeit mild, of nationalizing a resource?posted by: Mitchell Young on 05.16.07 at 12:03 AM [permalink]
Clearly Venezuela is becoming the next Zimbabwe. The amusing thing is watching the "true believers" taking their pilgrimage to Caracas to worship at the shrine of national socialism.
If Chavez is popular with the ignorant masses, but capital is fleeing Venezuela like a house on fire, what does that tell you about the country's future?posted by: Stan Betzer on 05.16.07 at 12:03 AM [permalink]
The US govt leases oil drilling rights on public land and unowned offshore land, not on private land.posted by: spencer on 05.16.07 at 12:03 AM [permalink]
The US govt leases oil drilling rights on public land and unowned offshore land, not on private land.
Sure, but there is a *lot* of the US that is public land and of course off shoring drill accounts for much of US oil production, It would be interesting to know how much US oil is pumped from our 'public' sources.
Of course the US wouldn't sieze rigs and other equipment belonging to a private company, which is what I think 'nationalization' implies in Venezuela. But the principle that 'we' want to ultimately control 'our' oil seems to be shared by both countries.posted by: Mitchell Young on 05.16.07 at 12:03 AM [permalink]
We might get a different sign over the Green Monster?posted by: A.S. on 05.16.07 at 12:03 AM [permalink]
It seems to me that we've had this debate before, but it bears repeating. Yes, Chavez was democratically elected the first time, but he has since rigged most of the rules in his own favor and stacked the courts and congress in order to rule by fiat. He is now trying to change the constitution to make himself leader for life. Sounds a lot like the beginning of a dictatorship to me. (Not to mention his open idolatry of Che and Fidel.) And yes, Chavez is popular with some of the poorest of Venezuela since he uses oil revenue to fund programs that benefit them. But middle class Venezuelans know that much of the oil revenue is lost to corruption rather than developing the economy, which would benefit everyone. Since Chavez controls the mass media, it's difficult to say how popular he really is, except by talking with Venezuelans. It seems to me that they fear him more than anything.posted by: OpenBorderMan on 05.16.07 at 12:03 AM [permalink]
Regarding Dan's hypothetical, I think Chavez would declare victory in the war of ideas. If the US nationalized Citgo, this would indicate our agreement that the socialist model is correct after all. He is clever enough to turn a defeat into a PR victory.
I also agree with the previous poster who said that Venezuela really doesn't have any choice about who to sell his oil to. Maybe the Chinese will build the capacity to process their heavy crude, just to stick their finger in Bush's eye, but it's really not in their interest while there is lighter crude available closer to home for them.posted by: OpenBorderMan on 05.16.07 at 12:03 AM [permalink]
Question? Wouldn't sending oil to China rather than the US take additional tanker capacity? Is it available? If the answer is no (as I think it is), then it's all talk no walk...posted by: Sean on 05.16.07 at 12:03 AM [permalink]
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