Chavez Threatens To Cut Off Oil Exports To US

[Strelnikov_]

AFX News Limited
08.15.2005

http://www.forbes.com/markets/feeds/afx/2005/08/15/afx2181137.html

Venezuelan President Hugo Chavez has threatened to cut off oil exports to the United States if Washington does not stop the 'aggressions' against his leftist government, Agence France-Presse reported.

'We do not want to break relations with the US government,' Chavez said Sunday. 'It is not in our plans, but if the aggressions continue to increase ... this could put at risk diplomatic relations between Venezuela and the United States.'


Washington's attacks could provoke 'something more serious: These two daily boats full of Venezuelan oil could head another way instead of going to the United States,' said Chavez, whose country is the fourth largest provider of oil to the United States.

'The US market is not indispensable to us,' Chavez said before thousands of young people waving Latin American countries' flags in a Caracas arena during a youth festival.

. . .

[goforit]

1. Thank you for the world of gratitude...PNAC!!!

:sarcasm:

[Skink]

2. Chavez's threatens and oil prices rise..

[I_Make_Mistakes]

3. Do you blame him?

The internet(s) has changed a lot and apparently PNAC is still behind the curve.

[smoogatz]

4. That's it--he's toast.

Bushco are now officially re-targeting the nukes that were aimed at downtown Tehran.

[Coastie for Truth]

5. There's a logic behind it

1. Chavez is a Communist and a friend of Castro's

So the Elian Gonzalez contingent would like it

2. Bibi Netanyahu's "Kitchen Cabinet Chief of Staff" has a grudge against Chavez that goes back 40+ years to their childhoods in Venezuela

So, the Venezuelan branch of Likud would like it

3. Convenient to mount an attack against Colombia

So, it passes muster with Negroponte and Bolton

4. VENEZUELA IS SITTING ON A BUNCH OF CRUDE OIL

[I_Make_Mistakes]

7. But we have the internet (s) and people do notice

The internet has changed a lot things and cannot be dismissed.

The times are achangin and not much to stop it. On second thought, maybe globalization isn't as bad as we thought. It used to be country vs. country (trust your gov't to look out for you), now, it could be employee vs employer.

Yes, it could be the down fall of corporate employers (playing employees off each other, with no means of truthful situations).

What's that? I think my electric just went out!!


















know

[Shipwack]

16. But... but ... we can't attack Venezuela.

We'd have to repaint all those tanks and trucks from desert tan to jungle green again! Not to mention the cost of issuing all those new uniforms...

[cliss]

43. Yes, it makes you wonder.

Question of the Day: how many conflicts can Washington handle in one day?

Answer: not too many.

I'm recalling that old goat Don RumsFool. When the US was building up to the war in Iraq, he warned would-be foes: "We can fight several wars on multiple fronts".

I wonder. After watching RumsFailed and the PNAC in Iraq and Afghanistan, all I can see is Total Unreconcilable Failure. There's no doubt about this. The US, supposedly the world's strongest military, fails in a country with no military.

There's a record to be proud of.

Since Chavez is acting mighty tough these days, maybe he knows something I don't.

[Porcupine]

6. He's must have an Ace up his sleeve.

Chinese silkworm missles or something that would prevent the BFEE from bombing the crap out of him.

Oh, right, if Venezueala goes offline our ecomony goes with it.

Hey George, is that a Venezualan lariat around your cojones? I think it is.

[Strelnikov_]

10. That Is Pretty Much It

Attack Hugo - Economic collapse.

Attack Iran - Economic Armageddon.

Thanks GOP.

My big fear of all this Iran talk is Our Great Leader is ignoring warnings that Iran could close the Strait of Hormuz, just like he ignored advise regarding Iraq.

[barb162]

8. We are in trouble...there's just not enough supply around

if he decides to carry out the threat or he decides to sell it all to the Far East. Weren't the Chinese just over there for a visit?

[sintax]

9. That's about 15% of US oil supply

Petrodollar Warfare: Dollars, Euros and the Upcoming Iranian Oil Bourse
by William R. Clark
(Friday August 05 2005)

"A successful Iranian bourse will solidify the petroeuro as an alternative oil transaction currency, and thereby end the petrodollar's hegemonic status as the monopoly oil currency. Therefore, a graduated approach is needed to avoid precipitous U.S. economic dislocations."

"This notion that the United States is getting ready to attack Iran is simply ridiculous...Having said that, all options are on the table."

-- President George W. Bush, February 2005

Contemporary warfare has traditionally involved underlying conflicts regarding economics and resources. Today these intertwined conflicts also involve international currencies, and thus increased complexity. Current geopolitical tensions between the United States and Iran extend beyond the publicly stated concerns regarding Iran's nuclear intentions, and likely include a proposed Iranian "petroeuro" system for oil trade. Similar to the Iraq war, military operations against Iran relate to the macroeconomics of 'petrodollar recycling' and the unpublicized but real challenge to U.S. dollar supremacy from the euro as an alternative oil transaction currency.




"We are in a process of absorbing the factors of the situation we're in and shedding the unreality that dominated at the beginning."

[Cha]

11. Does that mean...if it would

happen..no more Citgo? That's where I get my gas.

But, I don't blame him, I wish we had a leverage to make the bushits stop their "Agression".

[Deja Q]

12. Damn, things are about to come to a head...

:scared:

I wonder how *'s corporate interests feel now; they can't get their oil but China will. Communist China. A country that wouldn't have let them get anywhere NEAR the power and control they have. (though for all the wrong reasons, naturally...)

[wli]

13. how long before the rest of OPEC embargoes us?

My guess is not long.

[OneBlueSky]

14. oh goody . . . another country to attack . . . n/t

.

[NEOBuckeye]

15. The Bush Administration is a Diplomatic Catastrophe

Among many other very rotten things. It's hard to imagine Clinton or even Bush's father -- criminal rat bastard that he is -- allowing things to get this bad.

[0007]

26. The face of a Diplomatic Catastrophe

[nolabels]

28. Yea, send Johnny boy over there

That's the ticket :spray:

[dutchdoctor]

17. The oil market is a free global market

So it will be difficult to imagine such a decision having any effect.
They sell their oil to someone else, but the global supply and demand will not change, so neither will the price.
Venezuelan oil tankers will just have to travel further to sell their oil, making the profit margins smaller for Chavez.

just my $0.02

[Barkley]

23. There are over 14,000 Citgo gas stations that sell VZ's gasoline

Losing that much supply is bound to have some effect locally.

There are 14,000 Citgo gas stations in the US. (Click here http://www.citgo.com/CITGOLocator/StoreLocator.jsp to find one near you.)

By buying your gasoline at Citgo, you are contributing to the billions of dollars that Venezuela's democratic government is using to provide health care, literacy and education, and subsidized food for the majority of Venezuelans.

[K-W]

25. A change in the supply would, in fact, effect the supply. EOM

[dutchdoctor]

29. but Venezuela would still sell it, just not to the U.S.

You think they don't want the money? So the supply stays the same, and so does demand.
The only political influence you can buy with oil is when you give it away or sell it for less than the market place, like Chavez is doing with Cuba and some neighbouring countries.

Other than that, this is just a lot of noise from Chavez, imho

[K-W]

30. The world isnt some perfect market.

If one of our suppliers stops supplying us, it does have a very real impact on our supply. Supply and demand doesnt mean that oil magically appears where it is demanded.

[Tempest]

34. You're failing the economics test

If the U.S. can no longer get oil from Venezuela, it has to be gotten somewhere else.

If Saudi Arabia, or any other country, now has to make up the difference, the price of their oil goes up as customers bid up the price for the oil. All other oil producers increase their price because of market pressures.


This is Widgets 101.

[dutchdoctor]

36. economics test

"If Saudi Arabia, or any other country, now has to make up the difference, the price of their oil goes up as customers bid up the price for the oil. All other oil producers increase their price because of market pressures"

This only applies if Venezuela will lower their production, something they will not do. They are just selling it to others. So there will be no net difference and the market pressure will remain exactly the same.

[Tempest]

39. You still aren't getting it

I recommend you read up on how changes in suppliers affect prices.

I learned about it in high school.

[Tempest]

41. Maybe this will clear it up for you

http://personal.ashland.edu/~jgarcia/International%20economics/DemandandSupply.html


It clearly demonstrates how changes in suppliers in a finite good causes price increases.

[bemildred]

45. Suppose the new customers increase their consumption? nt

[Tempest]

51. Not really a factor here

What we're trying to get through to him is that anytime you change suppliers for a product which is limited in quantity and in suppliers, there are inflationary pressures on the price.


I provided a cite which demonstrates this, but he seemed to have ignored it.

[bemildred]

57. You don't feel increased consumption would affect prices

where supply is limited?

[Tempest]

33. Economics 101

I'm surprised he didn't know that a change in a supplier affects the price even if the same product can be gotten elsewhere.

[Tempest]

32. It will have a big effect on prices

If 4% of the U.S. oil supply dries up, the U.S. will be forced to make it up elsewhere, which will start a bidding war.

Simple economics.


China would be more than happy to pay more for the shipping costs and Venezuela would receive the same profit margins. Read up on the deal signed between Venezuela and China earlier this year. China agreed to not only build a new shipping port for oil deliveries, but agreed to pay for several new tankers.

[dutchdoctor]

35. Amazing how many condescending reactions you get for stating

a simple fact when it is not what people want to hear.
I hope you will forgive me for replying to all posts above in one post.

Venezuela will not cut down on its production because the oil exports are the life blood of their economy. Chavez simply says he will sell his oil to others instead of the U.S. So by selling less to the U.S., there will be more to sell to others, but the net effect will be no major changes in total global oil supply or demand. One poster said that the world isn't "some perfect market", but the oil market determines the price of oil, it's global, and subject to the law of supply and demand. If you think that other factors other than supply and demand make up the price of oil, please tell me what they are and what their influence is.

Of course, the average transportation costs may go up if the oil has to come from further, but as you can see here, the average transportation costs of crude oil are less than 10% of the price you pay at the pump, and imports from Venezuela account for only 11% (2003 number) of total U.S. oil consumption

Please, for the sake of the discussion, tell me why the law of supply and demand should not apply in this case, or this will become a rather pointless repetition of opinions

edited for clarity

[VegasWolf]

37. Not condescending. People simply do not agree with your analysis.

Venezuela will simply find other markets for its oil. Venezuela then
will not be hurt. The US will lose a supplier. The US will be hurt
because prices will rise, even on fear alone of restricted markets.

[K-W]

38. Your analysis is far from "a simple fact "

Real life doesnt conform to your oversimplified market model.

[Tempest]

40. Especially when you consider

OPEC is producing at 100% and already sells all of its oil on contract.

The price of oil will most certainly increase if a customer is now forced to bid higher for a smaller share of available oil it has to purchase from.

[dutchdoctor]

46. You guys are quick!

I am giving up now, although I am disappointed that neither of you could state other factors influencing the price of oil.

This is what http://www.energybulletin.net/2931.html">energybulletin.net says about the price of oil: "Turning to the world economy, there is no system better than the market economy, where Adam Smith's invisible hand allocates resources efficiently. Attempts to manipulate supply and demand cannot be sustained in the long run"

But what do they know?

[Tempest]

47. Strawman

Your post has nothing to do with the subject matter.

No one is attempting to manpulate the supply and demand of oil.

You do know what the word manipulate means, right?

[dutchdoctor]

53. You're right about one thing

This discussion is starting to have very little relevance to the OP,
which is why I am going to stop hijacking this thread right after this one last post.
I am sure I will not be able to convince you that Chavez' words are an empty threat, so I'll stop trying. Let's see what happens if he decides to follow through with this (something he won't do anyway).

btw I do understand the word "manipulate", what I don't understand is why you want to know.

bye now! :toast:

[Tempest]

55. Cut and run

What I really want to know is why you ignored my cite which demonstrated how a change in the supply chain causes inflationary pressures on prices?

But I guess I won't be getting an answer to that question, now will I?


If you believe Chavez's words are an empty threat, not only are you not an economic professor, you're not even a student of economics.

[K-W]

49. They apparently know nothing about economics.

"Adam Smith's invisible hand allocates resources efficiently"

This is a religious belief, and btw, is not what Adam Smith actually described.

[VegasWolf]

50. Right, we have certainly seen the market react rationally lately. Not! The

market operates on two principles, fear and greed. Everything
else is window dressing.

[Tempest]

42. Total supply won't change, but demand will

Anytime you change suppliers, especially with a product which has a limited source, price pressures upward occur across the market. Always.

Simple economics.


>>tell me why the law of supply and demand should not apply in this case<<

Because you're ignoring (1) oil is a finite product with limited producers and (2) OPEC is already pumping at 100% of capacity.

If 100% of OPEC's oil is already being sold, under contract, where is the U.S. going to get the 4% of oil they no longer have access to?

[Neshanic]

44. I do hope you are not an economics Professor.

If we so not get Venzuela's oil, someone else will. There is not an overabundance of it so, China or India will gladly buy what we do not get.

That in turn will cause the overall supply to drop here, and thus, higher prices for us.

[dutchdoctor]

48. Are you saying China will be burning oil they don't need

just to drive up prices?
Otherwise, demand from India and China will be determined by factors not in control of the U.S. or Hugo Chavez, so they don't really enter the equation here. In other words, demand from these countries will drive up prices, whomever Chavez sells his oil to.

I am no economics professor, by the way, but you don't have to be one to understand the workings of a global market.

[Tempest]

52. You don't seem to be informed

China's economy is slowing in part because they can't get enough oil to run its industry.

This was reported in all the financials over the last several months.


>>I am no economics professor<<

That much is obvious.

[Name removed]

58. Deleted message

Message removed by moderator. Click here to review the message board rules.

[R Hickey]

18. Bush and his Saudi friends are pushing up the price of their oil

By attacking every oil producing nation except Saudi Arabia, Bush and his Saudi friends are pushing up the price on their oil.

[cthrumatrix]

19. the world can see that Bush likes to "occupy areas of interest"= Oil

Chavez knows the US would like nothing more than the same for his country

[CJCRANE]

24. 15 saudis

attack America on 9/11, the neocons retaliate by invading Iraq and sabre-rattle against Iran, Syria and Venezuala, oil prices sky-rocket.

Some-one's benefitting from all this, but doesn't quite seem to be who it should be...

[natrat]

20. with no fear of retribution

the vote is fraudulent

[natrat]

21. scarey thought

what if the boy moron really is calling the shots and there is no shadow government

[shadowknows69]

22. Just do it Chavez

lets just get this world wide mess to come on and over with.

[bearfan454]

27. I agree

If we have to pay .25 a gallon more, well we're getting fucked anyways. It might even take resources away from nuking Iran.

[Mika]

31. I have some GREAT news..

.. I just saved a buch of money on my car insurance. :eyes:

[Stuckinthebush]

54. How foolish would a US attack of Venezuela be??

Exceedingly.

And Chavez knows it. He gains a lot of domestic points by thumbing his nose at Bush.

Bush can not invade Venezuela. We don't have the manpower, we don't have the supplies, and we don't have the troops.

An invasion of Venezuela would be another occupation. We can't sustain two occupations.

An invasion of Venezuela would further embolden US critics. This would be a clear war of aggression and of choice by the US, and we would lose whatever minuscule amount of integrity we have left. Bush would lose all allies (except Tony).

An invasion of Venezuela would be repelled by a new and fierce wave of freedom fighters from Venezuela and the area. We would occupy the country without a problem, but our stay would be marred by incredible casualties.

South American countries would oppose it and build up sympathy for Chavez. People would stream in to help fight the US.

The cost would be astounding. We would be carrying on a war in Iraq, a police action in Afghanistan, a war in the Southern Hemisphere, and we would be staring down North Korea and Iran at the same time.

China would laugh while it watched the downfall of the US empire.

Nope...no war in Venezuela unless we had a crazy fool as president and a do-nothing, sycophantic congress overseeing his actions.

Wait a minute......

Uh oh.

[democracy eh]

56. anybody read "Countdown to a Meltdown" in the July/Aug Atlantic?

text from the site preview below, but it of one of the Atlantic's "looking back from" hypothetical articles. this is fiction, however... The scary thing is... a Chavez embargo is the 'tipping point'.

In this one it looks back from 2016 and widespread economic collapse, rooted in the Bush tax cuts bankrupting the US government, housing bubble, outsourcing to China, debt held by China and oil vulnerability.

The story includes the following component:

in 2009 after an unsuccessful coup attempt in Venezuela (apparently sponsored by the CIA), Chavez declares 'economic war' on the US. The Amuay refinery, source of 1/8 of the Gasoline on American roads, was shut for 2 months, then reopens and refuses to ship to the US. (as we know there my be all the crude oil in the world, but limited refining capacity).

The subsequent shock does massive damage to the US economy. The issue wasn't necessarily global net supply of oil. It was lack of flexibility and the fact that the global oil market has no 'give' and the US economy hs less.

The quick rise in oil, led to instability in the US dollar. Those events may have been recoverable in the 1990s, but in the late 2000's the chickens came home to roost. A domino effect was started because of fragile conditions caused by an over leveraged US government (tax cuts and deficits) and over leveraged consumers (one home equity loan too many) and widespread imaginary wealth caused by the housing bubble. Dollar based assets rapidly lost value (overpriced investment properties)

again it is a story. but shows the precariousness of the situation
and history repeating itself - 1929, 1970's, etc...
it is a good read if you cn pick up a copy.


Countdown to a Meltdown (page 1 of 3)
http://www.theatlantic.com/doc/prem/200507/fallows
America's coming economic crisis. A look back from the election of 2016

by James Fallows

.....

January 20, 2016, Master Strategy Memo
Subject: The Coming Year—and Beyond

Sir:

It is time to think carefully about the next year. Our position is uniquely promising—and uniquely difficult.

The promise lies in the fact that you are going to win the election. Nothing is guaranteed in politics, but based on everything we know, and barring an act of God or a disastrous error on our side, one year from today you will be sworn in as the forty-sixth president of the United States. And you will be the first president since before the Civil War to come from neither the Republican nor the Democratic Party.1 This is one aspect of your electoral advantage right now: having created our new party, you are already assured of its nomination, whereas the candidates from the two legacy parties are still carving themselves up in their primaries.2
This article is viewable only by Atlantic subscribers.