If you want to punish "Big Oil", here's a target

[The_Sonarman]

A couple thoughts for those of you wanting to punish someone for high oil prices.....

I’m not a big fan of buying from hostile governments – I don’t mean countries whose governments are hostile toward the United States. I’m saying I don’t buy products from hostile, foreign government-owned companies operating in the U.S. What do I mean?

I'm talking about Venezuela’s president, Hugo Chavez. Did you know that his government-owned oil company, PDVSA, owns five U.S. refineries? It also owns CITGO Petroleum, which controls parts of another four refineries.

Hugo recently urged OPEC to reduce oil production to keep oil prices sky high. He also threatened to cut off Venezuelan oil supplies to the U.S. A Financial Times article estimated that losing Venezuela’s 2.2 million barrels per day would trigger an $11-per-barrel spike in the price of oil here.

Venezuela could, instead, sell that oil to China, El Presidente says. That doesn’t really work logistically because Venezuela is on the wrong side of South America to ship oil to China easily… or cheaply. Hugo can do it, but it would really cost him. He also has threatened to close down his refineries here in the States. If you think gas is expensive these days, that would cause a genuine crisis at the pump.

But before you let the Big Bad Wolf’s rhetoric scare you, remember Hugo is blowing a lot of hot air.

Venezuela is playing both sides of the fence. On one hand, it operates oil businesses in the U.S. On the other hand, it is threatening to cut off its oil shipments to the U.S. See, Hugo is as much a businessman as he is a dictator.

I don’t believe Hugo will follow through on any of these dramatic threats… at least not right now.

The oil price spike, I am certain, spurred lots of new exploration. We’re already at a 20-year high in oil supply. The best way to punish Hugo is to buy less of his oil.

So next time you fill up, buy American.

[Rhino]

Maybe there is a use for eminent domain.

[d'urville]

Ya, no CITGO, Chavez owns it all. He is the master of the empty threat as you say, Peru told him to fo recently, go Peru!

On the topic of eminent domain, rhino, didn't Bush make an EO on it? A little OT, but this:http://www.suntimes.com/output/news/cst-nws-domain25.html

The boycott of CITGO is supposedly working, but who knows, Chavez isn't saying.

[Johnnybegood]

No Citgo...Id rather run out and push my car..........

[jayson]

Funny you bring this up, I just wrote an eleven page thesis on this.

I agree with most of what you say, but I think a few points should be disputed.

Firstly, the so-called $11-a-barrel raise in prices wouldn't be due to Chavez cutting the supply, not in the least bit. It would be due to speculation that's been here ever since we started hearing about "running out of oil" in the 70s. In fact, many believe, including the US ambassador to Venezuela, that we could easily do without Venezuelan oil.

Granted it has been estimated that it could keep our economy afloat for 100 years, but that's not the point.

The point is Chavez isn't stupid. As was previously mentioned, we are their only economical outlet in the whole hemisphere for several reasons. The most obvious, we consume the most, hence we purchase the most, hence he receives the most profit from us, the US. This isn't to say that China could step in, which both VZ and China would like to see happen, but again, the costs to ship massive amounts of oil to and fro would cost so extremely much it would negate any and all profits. Again, Chavez isn't stupid and the almighty dollar is much more of a value to him than throwing the US connection away for some agenda.

You see, Chavez's legacy rests on one thing: his socialist programs. He is wildly popular with the poor which, obviously, make up a vast amount of Venezuelans. If oil profits dwindled, his power would dwindle and the country which is solely running on petro profits (90% of VZ's exports and 80% of government revenues are from petroleum) would come to screeching halt. Once this would occur, Chavez would be deposed in a short amount of time by an opposing figure who promises the world to VZ's poor.

To stop this, Chavez has been training thousands of civilians in geurilla tactics and other methods similar to Hitler's SS. Why? For the sole reason of staying in power, he is creating a Latino gestapo.

But I digress. I agree, Hugo is blowing a lot of hot air. Again, I attribute this to two reasons. First, the closer to the elections, his rhetoric is getting more and more intense which I, and many, believe that this is a shallow attempt to play on existing anti-US sentiment to swing voters to his side. Secondly, and I really emphasize here, when he makes such bold statements as "I'm going to shut US refineries down," speculation fuels oil prices and prices head upwards and fast.

Good luck on getting people to stop liking him, though... As some may know he sent quite a bit of cheap heating oil to US cities in what I see as propaganda, again trying to buy sentiment with the poor of the world to further his agenda.

He is a dangerous man and many things must be done to ensure he is stopped... but it will never happen. People are too apathetic and the government to slow and addicted to oil to do anything.

[DesertFox]

He'll get tossed out on his ass before long.

[The_Sonarman]

Jayson,

Interesting comments. However, shipping oil by supertanker (to the US, China, or elsewhere) is extremely economical per ton. One of the reasons these vessels are so enormous is that operating "a tanker" costs an almost fixed amount, so making it large or "very large" doesn't change those costs..... hence it's "cheaper" to build really, really big ones.

Granted, crossing the Pacific isn't a walk in the park, nor completely safe (given Typhoons and the three week crossing time at tanker speeds). Just heading north to the US is a lot shorter in terms of transit time and costs.

I still am disappointed the US allows itself to be held hostage to "Red Capitalist" communists such as Chavez, rather than just drill in our own backyard (oil shale and offshore all coastal states). Even Castro has contacted the Chinese to drill offshore Florida for Cuba's energy needs.... whereas "we" are too foolish to do so. Even the communists "get it".

We put ourselves in bondage to these tinpot dictatorships.

[neglesaks]

Ha! Chavez does not understand the free market! What would prevent the Chinese from selling some of the oil they buy from Chavez for only a dollar or two more expensive to the US companies? Tey make a profit, and the US gets oil that is only 2 bucks more costly per barrel, rather than 11 bucks.

Idiot socialists...