Interesting discussion on weening the US off of Venezuelan oil, regarding Obama and McCain's comments in the most recent debate indicating their plans to remove the US from dependence on oil from Venezuela.
First, let me say that I applaud both candidates for making a claim to remove us from dependence on oil from Chavez. It removes Chavez' ammunition against the US. He'll be able to keep his threat of cutting off oil to the US, if we are no longer dependent on his oil. So I can only hope that the next President of the US will have the fortitude and stamina to see his promise through of removing us from dependence on Venezuelan oil.
The second contributor, Paul Isbell, indicates that the US will still be dependent on Venezuelan oil after the first administration, and even if the US were to develop offshore oil fields that it would only replace 1 million barrels in 6 to 7 years. Hey, that's fine by me. The US imports about 1.2 to 1.3 million bpd from Venezuela. Offshore drilling would nicely fill that gap, and allow us to tell Chavez 'adios muchacho, que le vaya bien."
I don't buy into the whole 'global warming' baloney, but do think that the US must develop alternative forms of energy for it's own survival and self-reliance. Oil is the lifeblood of this country. Imagine no gasoline, no diesel, or very limited supplies of both. We had a taste over the summer, but that was just a taste.
I hope that the next President aggressively pursues drilling oil fields available to this country, from day 1 in parallel with developing alternative energy sources in a parallel track. And I agree with one of the commentators that it will take an act of sheer will to get onto viable alternative energy sources (not ethanol that consumes corn bound for our tables) like it did for the US to land a man on the moon.
Interestingly enough, it would be in the best interests of foreign governments like India and China as well to see the US get off of it's dependence on oil - the more for them, at a reduced price. Cheaper oil would then produce cheaper products, since it would cost less to ship all those toys from China to the US.
I do sincerely hope that in the next 10 years, I'll be driving a car that isn't burning gasoline. And I'd love to see the look on Chavez face when it's announced that the US will no longer be buying Venezuelan oil.
A boy can dream....
Sunday, October 26, 2008
El Dictador
Chavez is amused that Sarah Palin has called him a dictator.
His claim is that he has been elected democratically, and there is some truth to that. He's survived a referendum on his presidency (where there were doubts about the result, yet certified by Jimmy Carter), and then was re-elected (because the opposition was too fragmented to get behind a single candidate), and even conceded defeat to his constitutional referendum last year - a constitutional referendum that would have made him president for life.
Pretty democratic, eh? Sure, I'll give him that.
But the problem comes now when his party is facing defeat in the elections coming up in November. His party stands to lose key governorships and mayoral races. What's his response?
Read this article from La Tercera, and it will give you a good idea (hat tip to my oldest brother for emailing me the article):
This all may be a mute point (at least for Rosales and Zulia), if Chavez jails Rosales first. Apparently, Chavez thinks Rosales is out to assassinate him. Notice in the same article how 272 opposition candidates have been barred from running, due to claims of corruption. Yeah... right. Uh, who was caught with his hand in the cookie jar trying to help his pal win in Argentina?
Of course, that is just the latest evidence that Chavez is not as he claims - a social democrat.
His claim is that he has been elected democratically, and there is some truth to that. He's survived a referendum on his presidency (where there were doubts about the result, yet certified by Jimmy Carter), and then was re-elected (because the opposition was too fragmented to get behind a single candidate), and even conceded defeat to his constitutional referendum last year - a constitutional referendum that would have made him president for life.
Pretty democratic, eh? Sure, I'll give him that.
But the problem comes now when his party is facing defeat in the elections coming up in November. His party stands to lose key governorships and mayoral races. What's his response?
Read this article from La Tercera, and it will give you a good idea (hat tip to my oldest brother for emailing me the article):
25/10/2008 - 00:56Does that not sound like a dictator to you? "If we don't win the elections, I'm going to send in the army." Haven't heard of that practice in democratic countries. (Side note: notice how Chavez accuses Rosales of the same things that people have accused Chavez himself of, except on the opposite side of the political spectrum.)
El Presidente de Venezuela, Hugo Chávez, anunció hoy que está dispuesto a preparar acciones "militares" en el estado de Zulia si allí se impone la oposición en los comicios del próximo 23 de noviembre.
En un mitin electoral en Maracaibo, capital del Zulia, el gobernante anunció un "Plan Chávez" que comprendería acciones militares en caso de que la oposición resultara victoriosa en ese estado.
El líder opositor Manuel Rosales, actual gobernador de Zulia, aspira a ser alcalde de Maracaibo.
El gobernante anunció, sin precisar detalles, que en caso de que Rosales gane los comicios, preparará acciones "militares" dentro de lo que denominó "Plan Chávez".
Este plan se desarrollaría tanto en los estados y municipios en los que su Partido Socialista Unido de Venezuela (Psuv) resulte derrotado o victorioso.
"¡Qué nadie se olvide que esta es una revolución pacífica, pero es una revolución armada!", dijo Chávez en el mitin, cuyo objetivo fue apoyar a los candidatos del Psuv de cara a las elecciones del 23 de noviembre.
"La mejor manera de evitar la violencia el año próximo", cuando "el imperialismo yanqui" estima que podrá mantener el control del Zulia será "barriendo el 23 de noviembre" en las urnas, señaló Chávez.
Previamente, en otra alocución asimismo televisada, el Presidente venezolano vaticinó que fracasarán "los planes" para convertir al Zulia en "una Santa Cruz venezolana", en referencia a la provincia autonomista boliviana opositora.
"Hablé con Evo (Morales, Presidente de Bolivia) y estamos muy felices porque por fin el congreso boliviano aprobó la fecha para el nuevo referendo constitucional", dijo Chávez previamente, durante la inauguración de una planta de generación
termoeléctrica en ese estado del oeste venezolano.
"Se impone la razón contra el fascismo (...) Por eso los planes de convertir al Zulia en la Santa Cruz de Venezuela fracasarán", agregó al arremeter insistentemente contra Rosales, a quien derrotó electoralmente en diciembre de 2006, en los comicios presidenciales que lo confirmaron en el Gobierno hasta inicios del 2013.
Chávez calificó a Rosales como "un politiquero barato y mafioso" y lo acusó de haber convertido al Zulia en refugio de paramilitares, de mafias del narcotráfico y de grupos de extrema derecha venezolanos y colombianos.
This all may be a mute point (at least for Rosales and Zulia), if Chavez jails Rosales first. Apparently, Chavez thinks Rosales is out to assassinate him. Notice in the same article how 272 opposition candidates have been barred from running, due to claims of corruption. Yeah... right. Uh, who was caught with his hand in the cookie jar trying to help his pal win in Argentina?
Of course, that is just the latest evidence that Chavez is not as he claims - a social democrat.
Monday, October 20, 2008
Hezbollah in Venezuela
Wow.... I didn't realize that Hezbollah had established a presence in Venezuela. Here is an interesting piece from Israeli newspaper Yedioth talking about their foothold in Venezuela.
Even scarier is this video. There is no way to vouch for it's authenticity, but if it's true, radical Islam (beyond the sleeper cells in this country), is gaining a foothold in our own backyard (along with the Russians of course).
Even scarier is this video. There is no way to vouch for it's authenticity, but if it's true, radical Islam (beyond the sleeper cells in this country), is gaining a foothold in our own backyard (along with the Russians of course).
Thursday, October 16, 2008
From Donkey to Devil to Comrade
Wow, what a turnaround. Now Chavez is calling GW a comrade. His words folks, not mine.
Basically, Chavez is calling Bush a socialist for bailing out the failing financial institutions here in the US by having the US government buy stock in the financial institutions to infuse cash into them.
I'm not a financial genius, and by no means do I think the bailout was a great idea. I think that those financial institutions and their CEOs that played fast and loose in the sub-prime mortgage business and credit default swap markets should suffer the consequences of their risky gambles failing miserably.
The interplay of all that is going on in the economy is above my comprehension and something I am not capable of getting into and analyzing. I do know that there are millions of Americans whose assets have been wiped out because of the collapse of the economy and the collapse of financial institutions. Doing nothing is really not an option, in my opinion. And even with the $700 billion, who knows if it will be enough to keep the economy alive.
But I digress....
Back to El Burro's name calling.
Sure, the US Government is investing in failing financial institutions. But from what I understand the stocks being purchased are not voting stocks. If that is true, in effect the government is solely investing in these companies with less rights than I would if I were to go buy stock in one of these institutions. This isn't a corporate raid, or hostile takeover of these companies. This is designed to be a temporary move to infuse cash and free up the credit markets to get the economy moving again. The purchasing of stock was the prudent decision instead of buying up the bad debt on the books of these companies. The stock is an asset that the government can then sell at a later time to pay back the US Treasury and the American tax payer.
Let's compare/contrast this with what happened in Venezuela with Chavez nationalizing the oil industry.
The Venezuelan government didn't buy out ExxonMobil and others at fair market value for assets invested in Venezuela. Basically, it was take what we offer or take nothing.
The Venezuelan nationalization effort is not an investment effort, it's a move by a thug to syphon off profits from those industries for the good of the Venezuelan government - so that Chavez can bribe foreign governments, and put money in the pockets of Chavez and his cronies.
The Venezuelan nationalization effort is not a temporary move to shore up failing industries. In fact, as evidenced in this blog and many articles, Venezuelan nationalization of the oil industry has actually hurt oil output and potential oil revenues.
And here is the key difference between the two nationalizations (yet I wouldn't really classify the US bailout plan as a nationalization, as it is a temporary measure):
And in doing so, Chavez is running those companies into the ground leaving Venezuela worse off than before nationalizing the companies.
Oh well. Delusions again by the one man cantinfla show....
Basically, Chavez is calling Bush a socialist for bailing out the failing financial institutions here in the US by having the US government buy stock in the financial institutions to infuse cash into them.
I'm not a financial genius, and by no means do I think the bailout was a great idea. I think that those financial institutions and their CEOs that played fast and loose in the sub-prime mortgage business and credit default swap markets should suffer the consequences of their risky gambles failing miserably.
The interplay of all that is going on in the economy is above my comprehension and something I am not capable of getting into and analyzing. I do know that there are millions of Americans whose assets have been wiped out because of the collapse of the economy and the collapse of financial institutions. Doing nothing is really not an option, in my opinion. And even with the $700 billion, who knows if it will be enough to keep the economy alive.
But I digress....
Back to El Burro's name calling.
Sure, the US Government is investing in failing financial institutions. But from what I understand the stocks being purchased are not voting stocks. If that is true, in effect the government is solely investing in these companies with less rights than I would if I were to go buy stock in one of these institutions. This isn't a corporate raid, or hostile takeover of these companies. This is designed to be a temporary move to infuse cash and free up the credit markets to get the economy moving again. The purchasing of stock was the prudent decision instead of buying up the bad debt on the books of these companies. The stock is an asset that the government can then sell at a later time to pay back the US Treasury and the American tax payer.
Let's compare/contrast this with what happened in Venezuela with Chavez nationalizing the oil industry.
The Venezuelan government didn't buy out ExxonMobil and others at fair market value for assets invested in Venezuela. Basically, it was take what we offer or take nothing.
The Venezuelan nationalization effort is not an investment effort, it's a move by a thug to syphon off profits from those industries for the good of the Venezuelan government - so that Chavez can bribe foreign governments, and put money in the pockets of Chavez and his cronies.
The Venezuelan nationalization effort is not a temporary move to shore up failing industries. In fact, as evidenced in this blog and many articles, Venezuelan nationalization of the oil industry has actually hurt oil output and potential oil revenues.
And here is the key difference between the two nationalizations (yet I wouldn't really classify the US bailout plan as a nationalization, as it is a temporary measure):
Chavez lauds his nationalizations for allowing the state to refocus companies'
activities on helping the poor rather than creating value for their
shareholders.
And in doing so, Chavez is running those companies into the ground leaving Venezuela worse off than before nationalizing the companies.
Oh well. Delusions again by the one man cantinfla show....
Tuesday, October 14, 2008
What is the right price for barrel of crude?
Interesting blog entry on where the price for a barrel of oil should really be set - a break even point if you will for the countries that produce oil.
The author talks about where the price of oil should be in order for countries dependent on oil revenues to balance their budgets - countries including Venezuela. His guesstimate is from the high $50's to mid $90's. In fact, OPEC is meeting to discuss the output levels in order to control the price of oil.
What I think is missing out of the equation is what will happen if the price of oil continues a free fall. OPEC can control the output, but that is only one side of the equation. Demand is the other. If demand continues to fall due to the global economic crisis, OPEC will have to move to reduce output of oil even further to keep the price per barrel high.
I think though, that countries like Venezuela will continue to produce at the maximum output in order to fill their coffers with money. Oil is the only currency Chavez has. Sure, he's got aluminum, and some gold and diamonds, but oil is king in Venezuela, and Chavez needs those petrodollars to buy influence and look like the benevolent king. Oil is what feeds his socialist agenda, and he needs it more than anything.
On the flip side, if the world comes out of the economic crisis, maybe we'll learn to depend less on oil and spread out energy needs among other sustainable sources. I'm not a believer (term used intentionally) in Al Gore's theory of global warming with man as the main contributing factor, but I sure would like to not be dependent on foreign oil. I firmly believe that if the US were to develop it's own sources of energy and be 100% energy independent, it would re-institute us as the single Super Power in the world again.
As the saying goes, necessity is the mother of invention. With US automakers facing extremely tough times, maybe just maybe they'll start developing and producing ideas like cars that run on hydrogen, or even water. Take the US daily consumption of oil out of the overall oil demand equation and see what you come up with. Even the developing Asian markets wouldn't immediately replace that demand.
Chavez says Venezuela is insulated against the global economic crisis. Something tells me he missed a few macroeconomics classes. Just as Americans bet their houses on the continual rise in the price of real estate, Chavez has bet Venezuela on the continual rise or steady high price of a barrel of oil. As another saying goes, there is no such thing as a sure thing....
The author talks about where the price of oil should be in order for countries dependent on oil revenues to balance their budgets - countries including Venezuela. His guesstimate is from the high $50's to mid $90's. In fact, OPEC is meeting to discuss the output levels in order to control the price of oil.
What I think is missing out of the equation is what will happen if the price of oil continues a free fall. OPEC can control the output, but that is only one side of the equation. Demand is the other. If demand continues to fall due to the global economic crisis, OPEC will have to move to reduce output of oil even further to keep the price per barrel high.
I think though, that countries like Venezuela will continue to produce at the maximum output in order to fill their coffers with money. Oil is the only currency Chavez has. Sure, he's got aluminum, and some gold and diamonds, but oil is king in Venezuela, and Chavez needs those petrodollars to buy influence and look like the benevolent king. Oil is what feeds his socialist agenda, and he needs it more than anything.
On the flip side, if the world comes out of the economic crisis, maybe we'll learn to depend less on oil and spread out energy needs among other sustainable sources. I'm not a believer (term used intentionally) in Al Gore's theory of global warming with man as the main contributing factor, but I sure would like to not be dependent on foreign oil. I firmly believe that if the US were to develop it's own sources of energy and be 100% energy independent, it would re-institute us as the single Super Power in the world again.
As the saying goes, necessity is the mother of invention. With US automakers facing extremely tough times, maybe just maybe they'll start developing and producing ideas like cars that run on hydrogen, or even water. Take the US daily consumption of oil out of the overall oil demand equation and see what you come up with. Even the developing Asian markets wouldn't immediately replace that demand.
Chavez says Venezuela is insulated against the global economic crisis. Something tells me he missed a few macroeconomics classes. Just as Americans bet their houses on the continual rise in the price of real estate, Chavez has bet Venezuela on the continual rise or steady high price of a barrel of oil. As another saying goes, there is no such thing as a sure thing....
Monday, October 13, 2008
UPDATE: Free falling....
My oh my oh my..... The price of crude is dropping like a rock, thanks in part to the global economic crisis causing reduced demand for oil.
What will Chavez do if the price of oil drops any further? How will he pay for his 'imperial' foreign policy of giving oil and money away to buy influence in South America and the Caribbean?
Here is further evidence that Chavez turn at the reigns of power in Venezuela has damaged it's economy. The estimate is that Venezuela has lost out on 25% of it's potential output - from 3.2 million bpd in 1998 to 2.4 million bpd now. (I've seen other figures that make the 2.4 figure seem rather generous.)
And why has output declined, when reserves are in the 80 billion barrel range? From the mouth of the president of PDVSA
That's political speak for "we've plundered the profits of our oil and diverted them to buy the allegiance of foreign governments, and lined our own pockets as well." What happens when you don't invest some of your profits back into your business? Output falls - especially in the oil business.
Since 98, Chavez has nationalized the oil industry, ripping the oil fields out of the hands of private enterprise (largely American), in the name of taking back the oil profits. Problem is, those private enterprises invested billions in the oil fields to maintain output and to drill new areas. (Billions that Chavez never compensated them fairly for.) They knew what it took to get the maximum value out of the oil fields in Venezuela.
But no more....
And now, PDVSA is producing food and furniture? They can't perform their main business adequately, yet they have other tasks as well. Wow.... I bet the furniture falls apart when you get it home.
I find the last paragraph very interesting. Experts believe Venezuela won't be able to pay it's bills if oil drops below $80 a barrel. That means even as we speak, Venezuela is having a hard time paying it's bills.
And to think that Venezuela, back in the 70's and 80's, used to be able to pay it's bills when the oil boom produced far lower prices per barrel.
How sad....
UPDATE: See the MATH on how much Venezuela is missing out on per year with it's drop in production.
What will Chavez do if the price of oil drops any further? How will he pay for his 'imperial' foreign policy of giving oil and money away to buy influence in South America and the Caribbean?
Here is further evidence that Chavez turn at the reigns of power in Venezuela has damaged it's economy. The estimate is that Venezuela has lost out on 25% of it's potential output - from 3.2 million bpd in 1998 to 2.4 million bpd now. (I've seen other figures that make the 2.4 figure seem rather generous.)
And why has output declined, when reserves are in the 80 billion barrel range? From the mouth of the president of PDVSA
"The new PDVSA is central to the social battle for the advance of our country,"
said Rafael Ramirez, the company's president and the minister for petroleum. "We
have worked to convert PDVSA into a key element for the social battle."
That's political speak for "we've plundered the profits of our oil and diverted them to buy the allegiance of foreign governments, and lined our own pockets as well." What happens when you don't invest some of your profits back into your business? Output falls - especially in the oil business.
Since 98, Chavez has nationalized the oil industry, ripping the oil fields out of the hands of private enterprise (largely American), in the name of taking back the oil profits. Problem is, those private enterprises invested billions in the oil fields to maintain output and to drill new areas. (Billions that Chavez never compensated them fairly for.) They knew what it took to get the maximum value out of the oil fields in Venezuela.
But no more....
And now, PDVSA is producing food and furniture? They can't perform their main business adequately, yet they have other tasks as well. Wow.... I bet the furniture falls apart when you get it home.
I find the last paragraph very interesting. Experts believe Venezuela won't be able to pay it's bills if oil drops below $80 a barrel. That means even as we speak, Venezuela is having a hard time paying it's bills.
And to think that Venezuela, back in the 70's and 80's, used to be able to pay it's bills when the oil boom produced far lower prices per barrel.
How sad....
UPDATE: See the MATH on how much Venezuela is missing out on per year with it's drop in production.
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