Venezuela's Oil Power

[JoeChalupa]

Seems like there's a new sheriff in town.

NO MORE CHEAP OIL SAYS CHAVEZ
BBC Newsnight
Monday April 3, 2006

If you thought high oil prices were just a blip think again. In an exclusive interview with Greg Palast for BBC Newsnight the Venezuelan President Hugo Chavez has ruled out any return to the era of cheap oil.

The colourful Venezuelan leader hosts the OPEC meeting on June 1 in Caracas and he will ask OPEC to set $50 a barrel - the average price last year - as the long term level. During the 1990s the price of oil had hovered around the $20 mark falling as low as $10 a barrel in early 1999.

Chavez told Newsnight "we're trying to find an equilibrium. The price of oil could remain at the low level of $50. That's a fair price it's not a high price". Hugo Chavez will have added clout at this OPEC meeting.

US Department of Energy analyses seen by Newsnight show that at $50 a barrel Venezuela - not Saudi Arabia - will have the biggest oil reserves in OPEC. Venezuela has vast deposits of extra heavy oil in the Orinoco. Traditionally these have not been counted because at $20 a barrel they were too expensive to exploit - but at $50 a barrel melting them into liquid petroleum becomes extremely profitable.

The US DoE report shows that at today's prices Venezuela's oil reserves are bigger than those of the entire Middle East including Saudi Arabia, the Gulf states, Iran and Iraq. The US DoE also identifies Canada as another future oil superpower. Venezuela's deposits alone could extend the oil age for another 100 years.

The US DoE estimates that Chavez controls 1.3 trillion barrels of oil - more than the entire declared oil reserves of the rest of the planet. Hugo Chavez told Newsnight's Greg Palast that "Venezuela has the largest oil reserves in the world. In the future Venezuela won't have any more oil - but that's in the 22nd century. Venezuela has oil for 200 years." Chavez will ask the OPEC meeting in June to formally accept that Venezuela's reserves are now bigger than Saudi Arabia's.

Chavez's increased muscle will not go down well in Washington. In 2002 the Bush administration welcomed an attempted coup against Chavez. He told Newsnight that the Americans had organised it in an attempt to get hold of Venezuela's oil.

Ironically by invading Iraq George Bush has boosted oil prices and effectively transferred billions of dollars from American consumers to Chavez. Up to $200 million a day - half of it from the US - is flooding into Caracas. Chavez is spending this on building infrastructure and increasing the minimum wage and improving health and education in the poor ranchos which surround the cities. As a result even his opponents accept that Chavez is extremely popular and will easily win the next Presidential election in December.

Chavez is also spending billions in the rest of Latin America - exchanging contracts for oil tankers and infrastructure projects and buying up loans in Argentina and Brazil. He has made cheap oil deals with Ecuador and the Caribbean.

He has also spent some of the dollars which have come in from the US supporting Fidel Castro in Cuba. In return Cuba has supplied the thousands of doctors and teachers who are transforming conditions in the barrios of Caracas. Washington accuses Chavez of buying influence in Latin America.

The Newsnight team had to endure the long speeches and marathon six hour TV shows which Hugo Chavez delights in. Chavez posed for Newsnight posing with the sword of Simon Bolivar the 18th century liberator who drove out Spanish imperialists from South America. The symbolism was clear but behind the showman is a clever political brain.

Chavez has not invaded any foreign countries. He does not have secret prisons at home or abroad. Chavez has repeatedly won democratic elections and the opposition operates freely although some members have been charged with accepting illegal foreign donations. Nonetheless George Bush's administration repeatedly targets Chavez on human rights and finances his opponents.

Earlier this year US Defense Secretary Donald Rumsfeld compared Chavez to Hitler - because he was elected democratically - and last year the influential American evangelist Pat Robertson called for his assassination. Robertson later apologized and said that he did not "necessarily" have to be killed so long as he was kidnapped by American special forces.

Chavez told Newsnight that he was still concerned that George Bush had not learnt the lessons of Iraq and would order an invasion to try to secure Venezuela's oil. "I pray this will not happen because US soldiers will bite the dust and so will we, Venezuelans". He warned that any such attempt would lead to a prolonged guerilla war and an end to oil production. "The US people should know there will be no oil for anyone".

Chavez does not accept Tony Blair's criticism of him for lining up with Fidel Castro. He told Newsnight "if someone is sleeping together it is Bush and Blair. They share the same bed."


Do I hear $4 a gallon this summer? :cuss

[CommanderMcBragg]

VE Oil strikes of 2002 and 2003 + Iraq war = high oil prices today.
Chavez's regime would have collapsed if oil prices hadn't spiked shortly there after.
Chavez's form of democracy isn't ideal either.

[MaNuMaNiAc]

Chavez is just trying to keep his bullshit government afloat. You see, Venezuela's economy doesn't produce shit other than oil, and Chavez has been literally buying supporters. He has been wasting Venezuela's riches to support his own agenda. The problem is, the rest of the OPEC is so fucking clueless they will go along with this crap anyway.

[boutons_]

Gas Prices Up Sharply Ahead of Peak Season

By Steven Mufson
Washington Post Staff Writer
Tuesday, April 4, 2006; A01

Gasoline prices have surged by 36 cents a gallon in the Washington area over the past month, according to the AAA auto club, with the beginning of the peak driving season less than two months away.

The average price in the metropolitan area reached $2.63 a gallon for regular unleaded gasoline yesterday, up a penny from the day before and a nickel more than the national average. The price is up from $2.27 a gallon a month earlier and $2.17 a year ago.

With political tensions propping up crude oil prices and oil demand running strong in the United States and rising in China, gasoline prices could remain at these levels for the foreseeable future.

High gasoline prices have had only a modest impact on the driving habits of American motorists, who have done relatively little to moderate their gasoline consumption. Ever since oil prices soared in September after Hurricane Katrina, gasoline consumption has been within 1.5 percent of the previous year -- some months lower, some months higher, according to figures from the U.S. Energy Information Administration. Gasoline deliveries in January, barely lower than a year earlier, ran 13.3 percent higher than January 1999, when crude oil prices were a fraction of current levels.

"People are wealthier, they've been enticed into buying homes further from work, and the auto industry has been enticing them into buying very inefficient vehicles," said Philip K. Verleger, an oil consultant. He estimates that it takes a 20 percent increase in price to trim consumption by 1 percent today while a 10 percent price increase in the 1970s would have an identical effect.

Nonetheless, angry motorists are already sending e-mails to AAA complaining about the higher prices. One accused local gasoline stations of "price gouging" and claimed prices go up twice a day at some places.

John Felmy, chief economist of the American Petroleum Institute, blamed the increase on higher crude oil prices, shutdowns in U.S. refineries for maintenance deferred since Katrina, and regulations mandating that oil refiners remove an environmentally harmful additive and substitute more expensive ethanol.

But some consumers remain unconvinced. "These are things that don't explain the hike," said Dawn Van Dyke, a spokeswoman for AAA Mid-Atlantic. "It's not enough. It's too much of a hike."

The price increases come as major oil companies are reaping record profits. Last month, the Senate Judiciary Committee held a hearing at which senior executives from some of the largest firms were grilled by lawmakers about whether a spate of mergers among major companies had resulted in price gouging.

Crude oil prices yesterday briefly climbed to their highest levels since Feb. 1, pushed upward by unrest that has curtailed output in Nigeria by about half a million barrels a day, disputes between Venezuela and oil companies over contract terms, and a rise in investments in commodity funds, oil industry experts said. U.S. crude oil ended the day 11 cents higher, at $66.74 a barrel.

Officials from the Organization of Petroleum Exporting Countries and its members tried to moderate the increases, suggesting that there wasn't any plan to cut output. Qatari Oil Minister Abdullah al-Attiyah told Reuters on Sunday that "We are doing all that we can do . . . to stabilize the oil market."

But U.S. experts say key factors are out of OPEC's hands. To believe otherwise "assumes that crude prices lead [petroleum] product prices and not the other way around," Verleger said. "And since the beginning of 2004, product prices have been pulling up crude prices."

Many oil experts had predicted higher gasoline prices around this time because of new rules on gasoline additives. The Clean Air Act of 1990 required the oil industry to use additives to oxygenate gasoline, which reduces tailpipe emissions. Refiners largely turned to methyl tertiary-butyl ether (MTBE), which in small quantities enhances octane and reduces engine knocking. MTBE made up about 2.8 percent of the 140 billion gallons of gasoline used last year, Felmy said.

But MTBE, a volatile, flammable and colorless liquid, has been found to have contaminated groundwater in many places. Last year's energy bill removed the federal requirement for an oxygenate in gasoline, but supporters of ethanol persuaded lawmakers to insert a requirement that refiners use more ethanol. Ethanol supplies are modest, however, and the price runs about $2.50 a gallon, Felmy said, even though ethanol has only 70 percent of the energy value of gasoline.

Trilby Lundberg, editor of the gasoline monitor Lundberg Survey, said, "We want the cleanest gasoline in the world and we have it: the cleanest and most costly gas in the world." Only higher taxes in other countries prevent U.S. gasoline prices from being the highest in the world, she added. Verleger said that it wasn't only a matter of environmental concerns but also a question of competing interests. "The ag interests wanted to push more ethanol down people's throats," he said.

Felmy said prices have also gone up because of refinery shutdowns, partly for maintenance and partly to meet tougher emissions standards. After Hurricane Katrina, he said, "if you had a refinery that could keep running in the fall, you kept it running." Now, he said, companies are doing deferred maintenance. A year ago, U.S. refineries were running at 92.3 percent of capacity. They are currently running at about 87 percent, Felmy said. Nonetheless, some observers noted that inventories of both crude oil and refined petroleum products have risen since the beginning of the year, raising suspicions that major oil companies are pushing up prices as much as possible.

"There is generally a small increase in price this time of year as refinery capacity is limited while switching to summer-grade fuels, but the recent increases have been atypical for this changeover," AAA's Van Dyke said. "While we recognize current events and we expected summer demand increases to affect the overall price of gasoline, it isn't as dire as the price jump of the last month would have you believe. Gasoline prices have been trending upward at a steep rate that seems beyond justification."
© 2006 The Washington Post Company

[smeagol]

Latin American dictators suck ass really bad.

[Sec24Row7]

Chaves wants to lock it in at what seems like a "cheap" price of 50 right now because most of his reserves are uneconomic to produce and refine if the price is much less than that.

Heavy crude is really nasty shit that has to be processed out the ass to be worth anything and that process is expensive.

[exstatic]

Latin American dictators suck ass really bad.
So do North American ones. I smell an invasion/coup based on Bushco's smelling all that oil down there....

[smeagol]

So do North American ones. I smell an invasion/coup based on Bushco's smelling all that oil down there....
C'mon ex, as bad of a president Bush may be, he is nowhere near the league the LatAm dictators play in.

And he is not a dictator.

[JohnnyMarzetti]

And he is not a dictator.

I thought he was King?

[MaNuMaNiAc]

All I know is Latin America has been plagued by some really fucked up leadership for the past few decades

[smeagol]

All I know is Latin America has been plagued by some really fucked up leadership for the past few decades
Americans bashing Bush should think about this quote.

[Ocotillo]

Click on link to read the whole story (http://www.usatoday.com/money/world/2006-03-28-brazil-ethanol-cover_x.htm)

Brazil hopes to build on its ethanol success

By David J. Lynch, USA TODAY

RIO DE JANEIRO — Drivers here can fill up their cars with just about any imaginable fuel — except plain old gasoline.

A three-decade-long alternative energy campaign has outfitted Brazilian filling stations with fuel pumps that offer pure ethanol, a blend of gasoline and 20% ethanol called gasohol, or even natural gas. This year, Brazil will achieve energy independence — a goal the United States has been chasing without success since the energy crises of the 1970s.

Now, even as the U.S. haltingly sets out on the path Brazil blazed, producers here are drawing up plans to transform sugar-cane-based ethanol from a national success to a global commodity. Brazilian companies are investing $9 billion in dozens of new sugar mills to boost ethanol production while aiming to double exports by 2010. The eventual goal is to spread new ethanol industries in countries from Japan to Nigeria.

"We are moving fast to the wholesale export of ethanol. ... We're investing in infrastructure in Brazil to make it easier to export in large quantities," says Jose Gabrielli, chief executive of the state-owned oil company Petrobras, which oversees ethanol sales abroad.

In the USA, ethanol imports are expected to surge from modest levels this year as refineries phase out a gasoline additive called MTBE, says the Energy Information Administration. But Brazilian ethanol won't do as much as it could to help the U.S. reduce Middle Eastern oil imports because of domestic trade protection.

In 2005, the U.S. produced 3.9 billion gallons of fuel ethanol and imported 109 million gallons, almost all from Brazil. By expanding purchases of Brazilian ethanol, the USA could curb what President Bush has labeled its oil addiction. But the U.S. imposes a 54-cent-a-gallon tariff to discourage imports and protect domestic farmers. American ethanol is produced from corn, which costs more and produces less energy per unit of input than sugar cane.

"The U.S. is paying much more for gasoline in the world market than it could be paying for ethanol, not only produced in Brazil but also in all sugar cane countries," says Plinio Nastari, president of Datagro, a São Paulo-based consulting firm.

This is just irritating. Not that the Brazilians have accomplished this but that we (Americans) have drug our feet, given tax breaks to oil companies, done just about everything we could to not achieve energy independence.

This needs to be the top focus of this country. It is of even higher priority than the war on terror as it pertains directly to our national security. As China, India, Europe and other nations compete for the finite resource of oil, the price will only continue to rise. Not just the cost in dollars but the wars and human cost of fighting over the limited resource.

[RandomGuy]

Ethanol is unworkable for the united states or the world.

1. How many thousands of square miles of rainforest had to be cleared for the crops to make the ethanol?

2. Arable land in the rest of the world is a LIMITED commodity. We would have to give up food production at some rate to be able to make the crops for the ethanol.

3. Assuming we use fertilizers and pesticides to make marginal land arable so we don't have to cut food production, where do we get the extra water that all these happy crops need?

Ethanol is not a workable, long-term solution. It works in Brazil for a few reasons, but getting it to work elsewhere would require more than its supporters think at much less benefit.

[Ocotillo]

Certainly ethanol can be part of the solution or at least part of the evolution of energy consumption. Sugar is not the only resource that will work as we know here in this country corn can be used.

Question, because I have no idea: Can sugar beets be used rather than corn or cane sugar? Soy beans can be used for bio-diesel. We need to be thinking outside the box.

I personally have no problem with nuclear power for electricity as long as it is done with the proper safeguards to protect public safety.

For those of us here in Texas, have you ever been in the Rio Grande Valley? The wind is always blowing. Why not windtricity for south Texas and Corpus Christi?

[Ocotillo]

Also as long as oil is $ 60 a barrel or more, converting coal to liquid petroleum is a viable option. I don't see oil dropping from where it is now with world wide demand and the instability of oil producing countries.

[scott]

Certainly ethanol can be part of the solution or at least part of the evolution of energy consumption. Sugar is not the only resource that will work as we know here in this country corn can be used.

Question, because I have no idea: Can sugar beets be used rather than corn or cane sugar? Soy beans can be used for bio-diesel. We need to be thinking outside the box.

I personally have no problem with nuclear power for electricity as long as it is done with the proper safeguards to protect public safety.

For those of us here in Texas, have you ever been in the Rio Grande Valley? The wind is always blowing. Why not windtricity for south Texas and Corpus Christi?

Sugar beets can most certainly be used for ethanol. It's one of the most efficient feedstocks for ethanol production along with sugar cane. Corn is one of the least efficient - but because of successful lobbying by the corn industry, that is what you we are stuck with in America.

But RG is right... ethanol is not a solution... it actually shrinks the gasoline pool as an alternative to MTBE. (Which... by the way, does not just "leak" into groundwater... unless a tank is leaking. MTBE is not the problem, leaking tanks are the problem.)

OPEC price targets are generally meaningless, so I don't put more importance on the first article in this thread. But until American motorists decide to stop driving less, the price will go up and up and up. Thus far it has been an almost perfectly inelastic demand curve - which means prices have a lot of room to go up.

[RandomGuy]

Certainly ethanol can be part of the solution or at least part of the evolution of energy consumption. Sugar is not the only resource that will work as we know here in this country corn can be used.

Question, because I have no idea: Can sugar beets be used rather than corn or cane sugar? Soy beans can be used for bio-diesel. We need to be thinking outside the box.

I personally have no problem with nuclear power for electricity as long as it is done with the proper safeguards to protect public safety.

For those of us here in Texas, have you ever been in the Rio Grande Valley? The wind is always blowing. Why not windtricity for south Texas and Corpus Christi?

Sugar beets are used for most sugar you buy in the store. (History channel did a special on sugar that I watched)

Corn can be used, but if you read the article posted above, it doesn't provide as much energy per acre.

Nuclear has the small drawback of having fuel and waste shipments that are prime terrorist targets. Not something I want more of.

Ethanol may indeed play a part in the mix, but is not the end-all solution that some think it is.

The thing one has to think about is return on energy. There may be a lot of energy stored in crops but planting, fertilizing, watering, harvesting, and processing all use (wait for it...) ENERGY. So any rational analysis of using crop-based fuels has to account for this fact.

As for wind here is a good map of where wind is in the USA:

Map of relative wind strengths (http://www.oakland.edu/energy/Wind/US_Wind_Map_Large.jpg)

[RandomGuy]

Also as long as oil is $ 60 a barrel or more, converting coal to liquid petroleum is a viable option. I don't see oil dropping from where it is now with world wide demand and the instability of oil producing countries.

Coal suffers from some of the same problems as oil itself.

We have used up a lot of the easy to get at sources and what is left is more costly in terms of energy to get at.

All about the return on invested energy, baby. Coal sucks for a lot of other reasons like say pollution of one sort or another, either in the mining of the coal, the burning of the coal, or in this case the processing of the coal.


REALLY GOOD ARTICLE ON ENERGY ECONOMICS (http://www.abelard.org/briefings/energy-economics.asp)

[RandomGuy]

Sugar beets can most certainly be used for ethanol. It's one of the most efficient feedstocks for ethanol production along with sugar cane. Corn is one of the least efficient - but because of successful lobbying by the corn industry, that is what you we are stuck with in America.

But RG is right... ethanol is not a solution... it actually shrinks the gasoline pool as an alternative to MTBE. (Which... by the way, does not just "leak" into groundwater... unless a tank is leaking. MTBE is not the problem, leaking tanks are the problem.)

OPEC price targets are generally meaningless, so I don't put more importance on the first article in this thread. But until American motorists decide to stop driving less, the price will go up and up and up. Thus far it has been an almost perfectly inelastic demand curve - which means prices have a lot of room to go up.

The rising oil price phenomenon is easy to grasp with a couple of easy analogies.
Imagine someone in a hot air balloon dumps a bag of $100 bills over your house and you get to keep all that money. You would pick up the bills that are nearest to you on the ground as they would require the least amount of effort to get, and then you would work your way around to the stuff on top of your car, then get up on a ladder and get up on the roof and up in any trees. The stuff that takes the least amount of effort gets picked up first, then you will gather the stuff that is harder to reach after you can't find any easy stuff. The same is true for oil exploration and exploitation on the part of our oil-using civilization. We picked up the cheap, easy to get stuff and it is running out.
Now imagine that you are a person trapped on a deserted island. You need 2000 calories to live and the only food on the island is in the form of some fruit trees in the middle of the island that drop fruit regularly on the ground. You can walk over, pick up and eat a fruit at a cost of say, 10 calories, and get 500 calories from each fruit.You will need 4 fruits (plus a very small fraction) to survive per day. Now imagine that the easy fruit on the ground is gone, and you have to climb up the tree, go out onto a branch and laboriously saw the fruit off the tree. This takes 200 calories for EACH fruit. You will now need 6.67 fruits per day to survive and your total caloric intake has gone from 2040 calories to over 3300. Your body still only needs 2000 calories, but you had to spen 1300 calories to get that.The same is true for oil energy. The "return" on each new barrel of oil gets slimmer, so even if the world's economy/energy needs weren't growing our energy consumption would.

BUT

The world economy IS growing. For each 1 percent of GDP growth, we need 1 percent PLUS X percent with the X percent being determined by the efficiency of our energy sources.
SOOOO....If supply is constant or shrinking, and overall demand is going up, where does the "price point" go?
You guessed it, UP.
High enough that competing energy sources will eventually become more cost-efficient. I think faster than the oil companies expect.<a

[Manu'sMagicalLeftHand]

Americans bashing Bush should think about this quote.

So the choice is the lesser of two evils?

[boutons_]

"fucked up leadership for the past few decades"

The dubya/dickhead/cronies/hacks/Repugs have really fucked up the USA in the last 6 years.

[RandomGuy]

Americans bashing Bush should think about this quote.


I thought about it.

Bush still sucks. :td

[Nbadan]

I don't see what everyone is complaining about, $50 pb is much cheaper than the average price has been for a very long time. This is actually just a attempt by Venezuela to produce more crude while still working under the OPEC structure. You see, pumping limits are set by price per barrel and the reserves on the ground. The higher price limit will allow Venezuela to pump more oil, which is estimated to cost them around $40 pb to refine and get to market.

[Ocotillo]

REALLY GOOD ARTICLE ON ENERGY ECONOMICS (http://www.abelard.org/briefings/energy-economics.asp)

Thanks for the article. You could have at least warned me I needed sunglasses. :lol

[boutons_]

"REALLY GOOD ARTICLE ON ENERGY ECONOMICS"

Any site, including the Club, that still puts white/light text on black/dark background should be taken off line. It hasn't been cool since the 90's and it's fucking undreadable.

[smeagol]

So the choice is the lesser of two evils?
Well, there is no question in my mind I would live in a country who's president is Dubya rather than in country ruled by Castro / Chavez / Peron / Somoza / Stroessner / Daniel Ortega / Videla, Viola, Galtieri, Bignone / or any other dictator/clown LatAm has has to put up with.

Yes, sometimes the choice is the lesser of the two evils. You, my friend, living in Argentina, should know this. Every time we vote we chose between the lesser of two evils 'cause our politicians suck donkey's guevos.

[boutons_]

The Repugs refusing to push down the price of oil with conservation is financing not only Venezuela, but Iran and Russia, whose oil $billions will clearly not be used to USA's benefit.

Oil is the key geo-political/security problem, vulnerabilty for the USA, but the Repugs do nothing but enhance/protect the oil revenues of the US oil/gas companies.

[exstatic]

Ethanol is unworkable for the united states or the world.

1. How many thousands of square miles of rainforest had to be cleared for the crops to make the ethanol?

...

OK, think about this: We pay farmers NOT to grow shit in this country. We do NOT lack for arable land, and family farms are going under right and left.

[xrayzebra]

Heard a report yesterday that made my ears standup. Everyone thinks ethanol is
the cure for our oil shortage, but did you see where they run out of Gas in the
Dallas area because, get this: a shortage of ethanol, because it can only be transported
by truck, not by pipeline, because it is too corrosive and will mix with water to
easily. There was a shortage of trucks to get the stuff to the refineries. That kinda
puts a crimp in things, doesn't it? Is it back to the drawing board?

[boutons_]

The basic question about plant-derived fuel is whether harvesting solar energy from plants, considering all the artificial energy inputs to grow plants (fertilizer, pesticides, petroleum-based inputs, extraction/refining, irrigation, distribution, etc). produces a net energy gain.

ie, for a 100 units of (non-solar) energy input into plants, do we get 50 energy units of output (a net loss), or 150 units ?

The best photo-voltaics are up to 30% efficient in converting light energy to electrical energy.

Internal combustion engines are about only 30% efficient in converting fuel energy to mechanical energy, the 70% is lost in heat.