Venezuelan Coup and the US involvement
- Thread starter Makkonnen
- Start date
i respectfully disagree with your quick dismissal of the conspiracy theory.eewwll said:
there hasn't been a new oil refinery built in the US since sometime around 1976. heard a story on NPR this afternoon that said in the time between then and now, overall refining capacity in this country has been reduced by about 10% while overall demand has risen around 30%.
am i supposed to somehow believe that the execs running these massive oil refining companies were such blithering idiots that they actually thought demand for their product was going to go down? i for one choose not to believe that.
the more likely scenario as far as i can tell is that the people running these companies were smart enough (and greedy enough) to understand the basic economics of supply and demand. if they shut down refining capacity, they reduce supply. population growth and the overall increase in US economic prosperity (a side effect of which is increased discretionary income, more travel, and more fuel consumption) will ensure that demand keeps rising.
less supply + more demand = higher prices. economics 101.
a more advanced economic argument might be that the supply in this equation (refining capacity) is relatively inelastic, so it's not the refiner's fault. they can't just add capacity overnight. it takes years to bring a new facility on line. however, that argument only works if supply would have increased, but simply increased too slow to keep up with demand.
in this case, supply has gone NEGATIVE, thereby proving that either the refining companies are either incredibly stupid (because they aren't able to predict the obvious demand increases and respond by increasing capacity) or they are incredibly smart (because they recognize the crack-like addiction that this country has for their product and they pimp us all accordingly).
there is an obvious bottleneck in the oil supply chain and the refiners are it. they have no incentive to reform or change because they have everybody by the balls. if you don't like the word conspiracy, fine, call it capitalism. same thing.
here is an excerpt from article posted on the US Department of Energy website confirming the approximate 10% capacity reduction:
http://www.eia.doe.gov/emeu/cabs/usa.html
"The United States experienced a steep decline in refining capacity between 1981 and the mid-1990s. Between 1981 and 1989, the number of U.S. refineries fell from 324 to 204, representing a loss of 3 million bbl/d in operable capacity (from 18.6 million bbl/d to 15.7 million bbl/d), while refining capacity utilization increased from 69% to 87%. Much of the decline in U.S. refining capacity resulted from the 1981 deregulation (elimination of price controls and allocations), which effectively removed the major prop from underneath many marginally profitable, often smaller, refineries.
Refinery closures have continued since 1989, bringing the total number of operable U.S. refineries to 149 in 2003. In general, refineries that have closed have been relatively small and have had less favorable economics than other refineries in their market area. Also, in recent years, some smaller, less-economic refineries that had faced additional investments for environmental reasons in order to stay in business found closing preferable because they predicted that they could not stay competitive in the long term.
While some refineries have closed, and no new refineries have been built in nearly 30 years, many existing refineries have expanded their capacities. As a result of capacity creep, whereby existing refineries create additional refining capacity from the same physical structure, capacity per operating refinery increased by 28% over the 1990 to 1998 period, for example. Overall, since the mid-1990s, U.S. refinery capacity has increased from 15.0 million bbl/d in 1994 to 16.9 million bbl/d in September 2004. Also in September 2004, utilization of operating capacity at U.S. refineries was averaging around 90%, down from 97% in July and August. Although financial, environmental, and legal considerations make it unlikely that new refineries will be built in the United States, expansion at existing refineries likely will increase total U.S. refining capacity in the long-run."
its also economics 101 that higher price doesnt necessarily equal profit maximization.
and lets not forget the not-in-my-backyard attitude in the country. urban sprawl has made more backyards, so where are new refineries supposed to go? and even off shore refining has been made difficult by the kook evironmentalist thats against all things oil. we havent had a new nuclear facility in this country for decades either for the same reasons.
and lets not forget the not-in-my-backyard attitude in the country. urban sprawl has made more backyards, so where are new refineries supposed to go? and even off shore refining has been made difficult by the kook evironmentalist thats against all things oil. we havent had a new nuclear facility in this country for decades either for the same reasons.
Andre Nickatina said:
Wasn't a "quick dismissal".
This is an older thread so i don't feel like revisiting. But have you heard of PEAL OIL. I have studied it intensly. If you have, you can answer your own question as to "why haven't we built any oil refineries since the 70's. The U.S. entered Peal Oil in the 70's. And that is VERIFIABLE based on ALL emperical data.
you wrote: a more advanced economic argument
Again, what may seem advanced to you may actually be very simplistic. I suggest you read geological reports on peak oil and understand what it means. Refinery data is great..but you need to go the precursor...discovery. Oil discovery has been abmissal(verifiable) and demand is increasing exponentially (verifiable). Your conspiracy theory leans on speculation;however, the evidence all lead to a contrary conclusion. I'm sorry if I don't give much credence to wishful thinking.
The reality of the situation is that Production can not meet every growing demand and oil IS a finite resource. We are only seeing the beginning..we we will experience over the next decade9S) is the end of the "cheap oil era" 1880- present.
You wrote: the more likely scenario as far as i can tell is that the people running these companies were smart enough (and greedy enough) to understand the basic economics of supply and demand. if they shut down refining capacity, they reduce supply.
If you really knew anything about how these companies operate you would know how ridiculous that sounds. Oil Companies are valued to a high degree in two area (operating profits) and (reserves). No company is stupid enough to cripply their supply. The reality of the situation is that the market for new oil strikes are so competitive that companies do anything to increase capacity..like striking deal with corrupt goverments, etc.
Please provide ONE fact to support your theory that this is conspiracy. Not a speculation..but a FACT or any EVIDENCE.
I would suggest you pick up the following book. I have attached an except with a summary:
Hubbert's Peak: The Impending World Oil Shortage
One popular model used for predicting oil supply and shortage is based on the work of geophysicist M. King Hubbert. In 1956 Hubbert calculated that U.S. oil production would hit its all-time peak in the early 1970s. Though many ridiculed the proposition, Hubbert turned out to be right.
Now analysts are using Hubbert's formulas to predict when worldwide production will hit its irreversible peak. They conclude that the global peak in oil production is just a few years away. If it happens, supply will be unable to keep up with rising demand.
"I'm predicting that the smooth curve of oil production will peak on Thanksgiving 2005," said Princeton University professor emeritus Ken Deffeyes.
Deffeyes, a geologist by training, is the author of Hubbert's Peak: The Impending World Oil Shortage. He once worked with Hubbert at the Shell oil company's Houston, Texas, research lab.
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**sigh**
yet another Peak Oil fanatic. i've heard similar rantings before. deny all you want. call the facts that i post "speculation" all you want. but it's there and it's real. if you disagree, go argue with the people at the Department of Energy (see previous link posted). or just keep spewing your Club of Rome propaganda if you choose. either way, do you.
here's some more information that will probably piss you off:
http://educate-yourself.org/cn/mcgowanpeakoilandclubofrome14mar05.shtml
so much for "Peak Oil".
and you can make fun of the economic arguments as well if you'd like. doesn't bother me at all, but they're easily supportable by people who have studied these things "intensively" just as you claim to have done.
here's just one example that i'm sure will get you all riled up.
http://www.consumerfed.org/pdfs/gasoline1003.pdf
Excerpt
"This paper shows that business decisions are a major cause of the problem. While the operation of the domestic oil market is complex and many factors contribute to pricing problems, one central characteristic of the industry stands out – it has become so concentrated in several parts of the country that competitive market forces are weak. Long-term strategic decisions by the industry about production capacity interact with short-term (mis)management of stocks to create a tight supply situation that provides ample opportunities to push prices up quickly. Because there are few firms in the market, prices hold above competitive levels for significant periods of time. With an administration in Washington that is very unlikely to criticize or restrain the oil industry (both the President and the Vice President came out of the industry), oil companies have the opportunity to flex their pricing power.
The problem is not a conspiracy, but the rational action of large companies with market power. With weak competitive market forces, individual companies have flexibility for strategic actions that raise prices and profits:"
perhaps you (just as the author of the last article i quoted an excerpt from) have an aversion to the word "conspiracy". fine. as i said before, don't call it a conspiracy then if that makes you so uncomfortable. call it capitalism. that's just semantics. it's still gross exploitation and it still proves my point.
yet another Peak Oil fanatic. i've heard similar rantings before. deny all you want. call the facts that i post "speculation" all you want. but it's there and it's real. if you disagree, go argue with the people at the Department of Energy (see previous link posted). or just keep spewing your Club of Rome propaganda if you choose. either way, do you.
here's some more information that will probably piss you off:
http://educate-yourself.org/cn/mcgowanpeakoilandclubofrome14mar05.shtml
so much for "Peak Oil".
and you can make fun of the economic arguments as well if you'd like. doesn't bother me at all, but they're easily supportable by people who have studied these things "intensively" just as you claim to have done.
here's just one example that i'm sure will get you all riled up.
http://www.consumerfed.org/pdfs/gasoline1003.pdf
Excerpt
"This paper shows that business decisions are a major cause of the problem. While the operation of the domestic oil market is complex and many factors contribute to pricing problems, one central characteristic of the industry stands out – it has become so concentrated in several parts of the country that competitive market forces are weak. Long-term strategic decisions by the industry about production capacity interact with short-term (mis)management of stocks to create a tight supply situation that provides ample opportunities to push prices up quickly. Because there are few firms in the market, prices hold above competitive levels for significant periods of time. With an administration in Washington that is very unlikely to criticize or restrain the oil industry (both the President and the Vice President came out of the industry), oil companies have the opportunity to flex their pricing power.
The problem is not a conspiracy, but the rational action of large companies with market power. With weak competitive market forces, individual companies have flexibility for strategic actions that raise prices and profits:"
perhaps you (just as the author of the last article i quoted an excerpt from) have an aversion to the word "conspiracy". fine. as i said before, don't call it a conspiracy then if that makes you so uncomfortable. call it capitalism. that's just semantics. it's still gross exploitation and it still proves my point.
Not a peak oil fanatic. I can play the sophist with my own argument. However, the fact of the matter is that Peak is a phenonemon that occurs. It did occur in the U.S. and we could go to swing countries to make up the deficit. Peak Oil has hit other individual countries as well. However, we could be currently experiences world peak oil, which is a completely different phenomenon.
How about this.
As opposed to just sighting links. Make your own argument draw some conclusions. you can be a sophist on any argument, do a google search, and provide a counter argument.
However, make an analysis, but you don't understand the industry enough to extrapolate from your own thought on this. Make a basic analysis of those links in your own words.
Again, provide some facts for your statement. Show evidence to support your claim that this is a "conspiracy by high level executive execs colluding to raise prices".
You've made the claim. Prove some FACTS. Just put one piece of EVIDENCE here that proves that there is an industry wide effort(outside of OPEC) to set oil prices. Just ONE.
To equate conspiracy with capitalism...and says its just "semantics" is case in point. You don;t understand the things you are trying to define. I have no aversion to the word "conspiracy". However, I know what the term means. This case doesn't apply and by the very nature of the this industry...being fragmented through the world..it is an impossible concept to implement without full and collective price setting agreement by the entire Oil industry. Short term fluctuations can occur because of histeria, disaster, etc...however the long term pricing strategy of ANY commodity is based on supply. Supply, despite increased investment, is not increasing with the demand on this commodity. That is a FACT.
<i've heard similar rantings before. deny all you want. call the facts that i post "speculation" all you want. but it's there and it's real>
Never made a ranting. and you have not provided any FACTS. You do know what a fact is right? You are living in objective reality right?
I would be willing to listen to your argument if you provide some evidence to the fact that this is collusion. Enron was collusion. Don't equate the current market driven dynamics with collusion.
I'm not dating my conclusion..we aren't exclusive..this isn't emotional(like your Oil industry jerking us thoughts are).... all the market evidence and oil industry data leads to the conclusion that new discoveries and oil deposits have been decreasing for decades..yet consumption is rapidly increasing. This will inevitably lead to increases in prices. Tight supply chains equate with high prices. I don't have an affinity for my opinion. I have an affinity for the facts. The facts of the matter oppose your sentiment in this case.
The market, long term, is rational. Short term exubberance leads to wild fluctations in pricing on open markets;however, in the long term prices are consistent with the operating environment of the given entities. The geological reports, and continual restatement of oil reserves my countries and oil companies are telling. We are dealing with a finite resource that will eventually be depleted. But depletion is not the issue. The issue is when it becomes more and more expensive and ceases to be "cheap". Oil will continue to get more expensive...and eventually alternative methods(like shale extraction) will become more prevalent as the cost will begin to compete with the increase in oil prices from well discover from the downside and upside segments of the oil industry. The industry will begin to hit a paradymn shift.
You need to understand how to provide evidence that supports your claim. I want to illustrate how your logic is faulty. You are falling victim to the "hasty conclusion": for example you stated:
here is an excerpt from article posted on the US Department of Energy website confirming the approximate 10% capacity reduction:
>http://www.eia.doe.gov/emeu/cabs/usa.html
"The United States experienced a steep decline in refining capacity between 1981 and the mid-1990s. Between 1981 and 1989, the number of U.S. refineries fell from 324 to 204, representing a loss of 3 million bbl/d in operable capacity (from 18.6 million bbl/d to 15.7 million bbl/d), while refining capacity utilization increased from 69% to 87%.>
You have stated an EFFECT. What was the cause? This doesn't inherently support your claim. You've made a mistake with faulty logic...Causal Reductionism. Let's make the deduction and come to the correct and verifiable conclusion. The U.S. peaked in Oil production in 1970 and by 1980 production had nice dived because deposits had been depleted. This is geological fact accepted by geologists, private sector, and government. This isn't disputable. When deposits are depleted, there will be a subsequent decrease in the needs for domestic refineries. This is very simple logic. You are taking and EFFECT out of context and drawing a conclusion that doesn't exist. Your claim holds no weight with the evidence. There was no conspiracy to decrease refinery compacity to hamper supplies. Deposits evaporated and market resources were shifted to reflect this change. That was your CAUSE...not some conspriracy to cripple inventory
I hope you understand how simple that is to discredit your claim. You need a specific type of data to support your claim. I suggest you dig deep because you don't find it. Your claim by its very nature is subjective and the only way you would be able to support is if you had first hand evidence or court case evidence like with a Enron case.
How about this.
As opposed to just sighting links. Make your own argument draw some conclusions. you can be a sophist on any argument, do a google search, and provide a counter argument.
However, make an analysis, but you don't understand the industry enough to extrapolate from your own thought on this. Make a basic analysis of those links in your own words.
Again, provide some facts for your statement. Show evidence to support your claim that this is a "conspiracy by high level executive execs colluding to raise prices".
You've made the claim. Prove some FACTS. Just put one piece of EVIDENCE here that proves that there is an industry wide effort(outside of OPEC) to set oil prices. Just ONE.
To equate conspiracy with capitalism...and says its just "semantics" is case in point. You don;t understand the things you are trying to define. I have no aversion to the word "conspiracy". However, I know what the term means. This case doesn't apply and by the very nature of the this industry...being fragmented through the world..it is an impossible concept to implement without full and collective price setting agreement by the entire Oil industry. Short term fluctuations can occur because of histeria, disaster, etc...however the long term pricing strategy of ANY commodity is based on supply. Supply, despite increased investment, is not increasing with the demand on this commodity. That is a FACT.
<i've heard similar rantings before. deny all you want. call the facts that i post "speculation" all you want. but it's there and it's real>
Never made a ranting. and you have not provided any FACTS. You do know what a fact is right? You are living in objective reality right?
I would be willing to listen to your argument if you provide some evidence to the fact that this is collusion. Enron was collusion. Don't equate the current market driven dynamics with collusion.
I'm not dating my conclusion..we aren't exclusive..this isn't emotional(like your Oil industry jerking us thoughts are).... all the market evidence and oil industry data leads to the conclusion that new discoveries and oil deposits have been decreasing for decades..yet consumption is rapidly increasing. This will inevitably lead to increases in prices. Tight supply chains equate with high prices. I don't have an affinity for my opinion. I have an affinity for the facts. The facts of the matter oppose your sentiment in this case.
The market, long term, is rational. Short term exubberance leads to wild fluctations in pricing on open markets;however, in the long term prices are consistent with the operating environment of the given entities. The geological reports, and continual restatement of oil reserves my countries and oil companies are telling. We are dealing with a finite resource that will eventually be depleted. But depletion is not the issue. The issue is when it becomes more and more expensive and ceases to be "cheap". Oil will continue to get more expensive...and eventually alternative methods(like shale extraction) will become more prevalent as the cost will begin to compete with the increase in oil prices from well discover from the downside and upside segments of the oil industry. The industry will begin to hit a paradymn shift.
You need to understand how to provide evidence that supports your claim. I want to illustrate how your logic is faulty. You are falling victim to the "hasty conclusion": for example you stated:
here is an excerpt from article posted on the US Department of Energy website confirming the approximate 10% capacity reduction:
>http://www.eia.doe.gov/emeu/cabs/usa.html
"The United States experienced a steep decline in refining capacity between 1981 and the mid-1990s. Between 1981 and 1989, the number of U.S. refineries fell from 324 to 204, representing a loss of 3 million bbl/d in operable capacity (from 18.6 million bbl/d to 15.7 million bbl/d), while refining capacity utilization increased from 69% to 87%.>
You have stated an EFFECT. What was the cause? This doesn't inherently support your claim. You've made a mistake with faulty logic...Causal Reductionism. Let's make the deduction and come to the correct and verifiable conclusion. The U.S. peaked in Oil production in 1970 and by 1980 production had nice dived because deposits had been depleted. This is geological fact accepted by geologists, private sector, and government. This isn't disputable. When deposits are depleted, there will be a subsequent decrease in the needs for domestic refineries. This is very simple logic. You are taking and EFFECT out of context and drawing a conclusion that doesn't exist. Your claim holds no weight with the evidence. There was no conspiracy to decrease refinery compacity to hamper supplies. Deposits evaporated and market resources were shifted to reflect this change. That was your CAUSE...not some conspriracy to cripple inventory
I hope you understand how simple that is to discredit your claim. You need a specific type of data to support your claim. I suggest you dig deep because you don't find it. Your claim by its very nature is subjective and the only way you would be able to support is if you had first hand evidence or court case evidence like with a Enron case.
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Andre,
Like I said. First hand experience or through the legal system is the only way of providing proof in a scenario.
Let's see what dug up on a short term case like with increases during Katrina:
http://www.msnbc.msn.com/id/9424585/
However, even still, this inquiry is only related to gas gouging during Katrina and prices were already at record highs before the storm..so the focus is on a temporary fluctuation caused by a natural disaster. So even if something is dug up here, it would still leave much too be desired in regards to a worldwide conspiracy. But even in this case, they could very well produce no evidence of collusion is with investigations in the past.
Like I said. First hand experience or through the legal system is the only way of providing proof in a scenario.
Let's see what dug up on a short term case like with increases during Katrina:
http://www.msnbc.msn.com/id/9424585/
However, even still, this inquiry is only related to gas gouging during Katrina and prices were already at record highs before the storm..so the focus is on a temporary fluctuation caused by a natural disaster. So even if something is dug up here, it would still leave much too be desired in regards to a worldwide conspiracy. But even in this case, they could very well produce no evidence of collusion is with investigations in the past.
Crude Realities: Living with Chavez
<font size="5"><center>CRUDE REALITIES: LIVING WITH CHAVEZ</font size>
<font size="4">Oil’s New Mr. Big</font size>
Venezuela is one of America’s biggest suppliers of crude—and
that’s the way leftist President Hugo Chavez likes it. He’s
looking to squeeze more dollars out of the international
oil companies that drill there, while keeping prices high.
Should we worry? </center>
FORTUNE
By Nelson D. Schwartz
From the October 3, 2005 Issue
Bound for places like Boston, Baltimore, and Port Everglades, the five supertankers sit low in the shimmering blue-green Caribbean water, their hulls brimming with oil, gasoline, and jet fuel. Filling at a rate of 36,000 barrels an hour, these ships can be loaded and on their way from Venezuela in half a day, which is a good thing, since five more tankers are waiting in the distance for their fill-up. Americans are paying $15 million for each cargo, but the plant’s manager just shrugs. “It’s business,” he says, already focusing on tomorrow’s manifest: 500,000 barrels of high-sulfur fuel oil, destination China.
The problem for the U.S. is that we may have to ante up more—a lot more—for that petroleum in the future if Venezuelan President Hugo Chavez has his way. Venezuela is now the key to satisfying America’s oil habit: By some measures this volatile Latin American nation, just a four-day sail from the U.S. Gulf Coast, has leap-frogged Canada and Saudi Arabia to become America’s leading foreign source of crude. In the first half of 2005, Venezuela supplied one-seventh of our imported oil, or 1.6 million barrels a day. And that’s helping the fiery socialist Chavez challenge Big Oil. He’s hiking taxes and royalties on the international giants, even as he strengthens the hand of OPEC and state-owned energy companies around the world. What’s more, Chavez has threatened to shut the spigot if the Bush administration challenges his grip on power in Caracas.
Naturally, that’s raising the temperature both in boardrooms in Texas and in the corridors of power in Washington, D.C. In August the Rev. Pat Robertson made headlines with a call for U.S. special forces to “take out” Chavez—he later apologized—and even normally cool heads in Congress are eager to confront what they claim is a dangerous regime close to U.S. shores. Representative Connie Mack (R-Florida) says, “We must all recognize that when we purchase Hugo Chavez’s gasoline, we line the pockets of a staunch enemy of freedom.” Representative Mark Kirk (R-Illinois) goes even further, calling Chavez “Venezuela’s Mussolini.”
Ironically, even as the political rhetoric gets hotter, with politicians like Mack arguing that Chavez is “Castro with oil,” the U.S. and Venezuela’s oil-fueled symbiosis is growing closer. “He depends on us as much as we depend on him,” says consultant Rob Cordray of PFC Energy, noting that about 50% of Venezuela’s crude exports go to the U.S. The devastation wrought by Hurricane Katrina has offered Venezuela an even greater opportunity: In early September, Venezuelan authorities announced they would send an extra one million barrels of gasoline north to make up for the output of U.S. refineries shuttered by the storm. And while the Robertson-Chavez exchange was portrayed as a dustup between crackpots from opposite ends of the spectrum, Chavez is a smart, canny operator—and his hunger for both petrodollars and petro-power is something America needs to take very seriously.
The point man in Venezuela’s contentious relationship with the U.S. is a tall, prematurely gray 42-year-old engineer named Rafael Ramírez. As both Venezuela’s Energy Minister and CEO of its national oil company, PDVSA (pronounced ped-a-VAY-sa), Ramírez is arguably the most powerful oilman Americans have never heard of. (If some Americans do know the name Rafael Ramírez, they’re probably thinking of the all-star shortstop who played for the Atlanta Braves in the 1980s.) But if you’ve visited one of Citgo’s 14,000 U.S. service stations recently, Ramírez appreciates your business. Citgo is among America’s biggest gasoline providers and PDVSA owns it. With Venezuela now the world’s sixth-largest oil producer and possessor of the biggest reserves of any country in the Western Hemisphere, Ramírez is becoming increasingly visible in global energy circles.
In a rare interview in his spacious Caracas office—which features an impossible-to-miss portrait of Chavez—Ramírez lays out for FORTUNE his plan to bend Venezuela’s oil industry to Chavez’s socialist vision and change the balance of power between oil-producing countries and private companies. He may be dressed in a conservative dark suit and tie, but Ramírez is an agitator of the highest order on subjects like how to extract more money from Big Oil. He is tightening his grip on U.S. giants like Exxon Mobil and Chevron as well as European players such as Shell and Total. Through higher taxes and royalties, all foreign oil companies are being forced to turn over a bigger share of their profits to the government in order to fund Chavez’s new social programs. “We are working on becoming a tool for the state to recover its sovereignty,” Ramírez explains. “When the private companies have control over production, it’s impossible to conduct your own national oil policy.”
Ramírez isn’t just setting his sights on foreign oil firms in Venezuela. He wants PDVSA to work with national oil companies (NOCs) in countries like Iran, Saudi Arabia, and Algeria so that the NOCs can wrest power away from the likes of Exxon and other private corporations worldwide. “This does not mean we will refuse to work with private companies,” says Ramírez. “But when oil companies have the high hand over a country, there is no way for a country to resist the pressure coming from these companies.” Ramírez also wants a bigger say within OPEC. Venezuela was a founding member of the cartel in 1960 and remains its most powerful non-Arab member. Before Chavez took over, Venezuela routinely flouted OPEC’s production quotas. That’s no longer the case—and Ramírez wants to make sure OPEC enforces its quotas in order to keep prices high.
Even as Ramírez challenges the status quo in the oil arena, his boss Chavez is upsetting Washington by courting U.S. foes like Cuba and Iran. He makes no secret of his admiration for Fidel Castro and Venezuela supplies Cuba with nearly 100,000 barrels a day of subsidized oil. In exchange, Venezuela receives medical help from more than 17,000 Cuban doctors and dentists stationed in Venezuela. Chavez has been a frequent visitor to Havana, most recently in August. A delegation from Tehran visited Caracas in March, and PDVSA employees are now getting technical training from Iran, a country the U.S. believes is supporting terrorists in Iraq. Chavez has also been signing deals throughout Latin America and the Caribbean to supply cheap oil to his neighbors, elevating Venezuela’s influence—and his own profile.
PDVSA is no longer just an oil company—it’s the engine of the Chavez revolution. After being crippled by an anti-Chavez strike in 2003 that resulted in the firing of more than 18,000 workers, PDVSA says it is on track to generate revenues of $75 billion this year. “La Nueva PDVSA,” as the company is known, has earmarked $4 billion of its internal budget this year for social programs and projects like new highways and railroads. Nearly $10 billion more flows into the Venezuelan treasury, forming the backbone—35%—of the federal budget. “PDVSA was an enclave within the country with very expensive facilities surrounded by poverty and misery,” says Ramírez, who’s become a hero to Venezuela’s poor because of PDVSA’s largesse. “That’s impossible today.” Just in case anyone forgets who really deserves the credit for this “21st-century socialism,” Chavez’s image appears on the back of many company IDs, and his slogans decorate the hallways of PDVSA
http://www.fortune.com/fortune/investing/articles/0,15114,1105699-1,00.html
<font size="5"><center>CRUDE REALITIES: LIVING WITH CHAVEZ</font size>
<font size="4">Oil’s New Mr. Big</font size>
Venezuela is one of America’s biggest suppliers of crude—and
that’s the way leftist President Hugo Chavez likes it. He’s
looking to squeeze more dollars out of the international
oil companies that drill there, while keeping prices high.
Should we worry? </center>
FORTUNE
By Nelson D. Schwartz
From the October 3, 2005 Issue
Bound for places like Boston, Baltimore, and Port Everglades, the five supertankers sit low in the shimmering blue-green Caribbean water, their hulls brimming with oil, gasoline, and jet fuel. Filling at a rate of 36,000 barrels an hour, these ships can be loaded and on their way from Venezuela in half a day, which is a good thing, since five more tankers are waiting in the distance for their fill-up. Americans are paying $15 million for each cargo, but the plant’s manager just shrugs. “It’s business,” he says, already focusing on tomorrow’s manifest: 500,000 barrels of high-sulfur fuel oil, destination China.
The problem for the U.S. is that we may have to ante up more—a lot more—for that petroleum in the future if Venezuelan President Hugo Chavez has his way. Venezuela is now the key to satisfying America’s oil habit: By some measures this volatile Latin American nation, just a four-day sail from the U.S. Gulf Coast, has leap-frogged Canada and Saudi Arabia to become America’s leading foreign source of crude. In the first half of 2005, Venezuela supplied one-seventh of our imported oil, or 1.6 million barrels a day. And that’s helping the fiery socialist Chavez challenge Big Oil. He’s hiking taxes and royalties on the international giants, even as he strengthens the hand of OPEC and state-owned energy companies around the world. What’s more, Chavez has threatened to shut the spigot if the Bush administration challenges his grip on power in Caracas.
Naturally, that’s raising the temperature both in boardrooms in Texas and in the corridors of power in Washington, D.C. In August the Rev. Pat Robertson made headlines with a call for U.S. special forces to “take out” Chavez—he later apologized—and even normally cool heads in Congress are eager to confront what they claim is a dangerous regime close to U.S. shores. Representative Connie Mack (R-Florida) says, “We must all recognize that when we purchase Hugo Chavez’s gasoline, we line the pockets of a staunch enemy of freedom.” Representative Mark Kirk (R-Illinois) goes even further, calling Chavez “Venezuela’s Mussolini.”
Ironically, even as the political rhetoric gets hotter, with politicians like Mack arguing that Chavez is “Castro with oil,” the U.S. and Venezuela’s oil-fueled symbiosis is growing closer. “He depends on us as much as we depend on him,” says consultant Rob Cordray of PFC Energy, noting that about 50% of Venezuela’s crude exports go to the U.S. The devastation wrought by Hurricane Katrina has offered Venezuela an even greater opportunity: In early September, Venezuelan authorities announced they would send an extra one million barrels of gasoline north to make up for the output of U.S. refineries shuttered by the storm. And while the Robertson-Chavez exchange was portrayed as a dustup between crackpots from opposite ends of the spectrum, Chavez is a smart, canny operator—and his hunger for both petrodollars and petro-power is something America needs to take very seriously.
The point man in Venezuela’s contentious relationship with the U.S. is a tall, prematurely gray 42-year-old engineer named Rafael Ramírez. As both Venezuela’s Energy Minister and CEO of its national oil company, PDVSA (pronounced ped-a-VAY-sa), Ramírez is arguably the most powerful oilman Americans have never heard of. (If some Americans do know the name Rafael Ramírez, they’re probably thinking of the all-star shortstop who played for the Atlanta Braves in the 1980s.) But if you’ve visited one of Citgo’s 14,000 U.S. service stations recently, Ramírez appreciates your business. Citgo is among America’s biggest gasoline providers and PDVSA owns it. With Venezuela now the world’s sixth-largest oil producer and possessor of the biggest reserves of any country in the Western Hemisphere, Ramírez is becoming increasingly visible in global energy circles.
In a rare interview in his spacious Caracas office—which features an impossible-to-miss portrait of Chavez—Ramírez lays out for FORTUNE his plan to bend Venezuela’s oil industry to Chavez’s socialist vision and change the balance of power between oil-producing countries and private companies. He may be dressed in a conservative dark suit and tie, but Ramírez is an agitator of the highest order on subjects like how to extract more money from Big Oil. He is tightening his grip on U.S. giants like Exxon Mobil and Chevron as well as European players such as Shell and Total. Through higher taxes and royalties, all foreign oil companies are being forced to turn over a bigger share of their profits to the government in order to fund Chavez’s new social programs. “We are working on becoming a tool for the state to recover its sovereignty,” Ramírez explains. “When the private companies have control over production, it’s impossible to conduct your own national oil policy.”
Ramírez isn’t just setting his sights on foreign oil firms in Venezuela. He wants PDVSA to work with national oil companies (NOCs) in countries like Iran, Saudi Arabia, and Algeria so that the NOCs can wrest power away from the likes of Exxon and other private corporations worldwide. “This does not mean we will refuse to work with private companies,” says Ramírez. “But when oil companies have the high hand over a country, there is no way for a country to resist the pressure coming from these companies.” Ramírez also wants a bigger say within OPEC. Venezuela was a founding member of the cartel in 1960 and remains its most powerful non-Arab member. Before Chavez took over, Venezuela routinely flouted OPEC’s production quotas. That’s no longer the case—and Ramírez wants to make sure OPEC enforces its quotas in order to keep prices high.
Even as Ramírez challenges the status quo in the oil arena, his boss Chavez is upsetting Washington by courting U.S. foes like Cuba and Iran. He makes no secret of his admiration for Fidel Castro and Venezuela supplies Cuba with nearly 100,000 barrels a day of subsidized oil. In exchange, Venezuela receives medical help from more than 17,000 Cuban doctors and dentists stationed in Venezuela. Chavez has been a frequent visitor to Havana, most recently in August. A delegation from Tehran visited Caracas in March, and PDVSA employees are now getting technical training from Iran, a country the U.S. believes is supporting terrorists in Iraq. Chavez has also been signing deals throughout Latin America and the Caribbean to supply cheap oil to his neighbors, elevating Venezuela’s influence—and his own profile.
PDVSA is no longer just an oil company—it’s the engine of the Chavez revolution. After being crippled by an anti-Chavez strike in 2003 that resulted in the firing of more than 18,000 workers, PDVSA says it is on track to generate revenues of $75 billion this year. “La Nueva PDVSA,” as the company is known, has earmarked $4 billion of its internal budget this year for social programs and projects like new highways and railroads. Nearly $10 billion more flows into the Venezuelan treasury, forming the backbone—35%—of the federal budget. “PDVSA was an enclave within the country with very expensive facilities surrounded by poverty and misery,” says Ramírez, who’s become a hero to Venezuela’s poor because of PDVSA’s largesse. “That’s impossible today.” Just in case anyone forgets who really deserves the credit for this “21st-century socialism,” Chavez’s image appears on the back of many company IDs, and his slogans decorate the hallways of PDVSA
http://www.fortune.com/fortune/investing/articles/0,15114,1105699-1,00.html
Re: Crude Realities: Living with Chavez
<font size="5"><center>CRUDE REALITIES: LIVING WITH CHAVEZ</font size>
<font size="4">Oil’s New Mr. Big</font size>
<font size="3">Part Two</font size></center>
Like all skilled actors and politicians, Ramírez and Chavez are keenly aware of their audience. They walk a fine line, alternately assuring Americans that Venezuela will continue to supply El Norte with 1.6 million barrels of crude a day and telling Venezuelans that they will cut America’s energy lifeline if the Bush administration makes any hostile moves against Caracas. Given the history of U.S. intervention in Latin America—encouraging the overthrow of Salvador Allende in Chile, the removal of Panama’s Manuel Noriega by the first President Bush—it’s no surprise that many Venezuelans think a U.S. invasion is a real possibility. Yet while the current President Bush would be happy to see Chavez replaced by a more pro-Western leader, any military action is unthinkable as long as the oil keeps flowing.
And despite this former paratrooper’s authoritarian tendencies—he attempted to seize power in a coup six years before being elected democratically in 1998 and has recently tried to intimidate opponents through arrests and a new law aimed at the press—Chavez is hardly Fidel. At least not yet. Most privately owned media in Venezuela remain critical of Chavez, and U.S. companies have a major presence. In downtown Caracas, a sign urging solidarity with Chavez’s Bolivarian revolution sits next to a huge green-and-white IBM billboard.
For the most part, the macho talk coming out of Caracas is just that. As Ramírez himself notes, America’s location and enormous demand make it Venezuela’s most natural customer. But the image of standing up to the U.S. plays well in the ranchitos, the Caracas slums that are Chavez’s political stronghold. (Chavez has nicknamed Bush “Mr. Danger,” while Defense Secretary Donald Rumsfeld is “Mr. War.”) As Chavez knows, this kind of rhetoric has helped keep his political idol Castro in power through ten U.S. presidencies.
Still, foreign oil giants are definitely feeling the heat. In fact, the Venezuelan tax authority has created a special branch focusing exclusively on private oil companies. Ramírez accuses Big Oil of systematically cheating on their taxes, and back-tax claims of at least $1 billion are likely. Is this the start of a campaign akin to the Kremlin’s attack on Yukos, the Russian oil giant that was bankrupted and then nationalized after being hit with back-tax penalties? “I don’t think the situation is that bad,” says Ramírez. “Most companies are willing to pay, and they are paying.”
The key element in Ramírez’s squeeze play is the forced renegotiation of 32 operating agreements under which foreign firms pump 500,000 barrels a day of oil that they deliver to PDVSA for a set fee. Instead of the old 34% levy, profits from these deals will be taxed at a 50% rate. And rather than operating agreements, Ramírez is insisting on joint ventures, with Venezuela controlling at least 51%. By forcibly rewriting the contracts, Ramírez can earn more per barrel and also avoid paying hundreds of millions in incentive payments that were due to foreign companies under the old agreements. What’s more, in the tar sands of the Orinoco belt, where Exxon, Total, Chevron, and others have separate agreements and have invested billions to extract oil from what’s basically asphalt, royalties on each barrel of oil are being raised from 1% to nearly 17%.
The new terms haven’t been finalized, but they’re not just being applied to U.S. giants; all foreign companies, including NOCs like Brazil’s Petrobras and China’s CNPC, are being hit. Most, if not all, are likely to swallow the changes Ramírez is imposing. If they don’t go along, they’ll lose access to Venezuela’s 80 billion barrels of proven oil reserves—one of the biggest energy prizes on the planet.
That’s why powerhouses like Chevron have adopted a remarkably accommodating stance toward Venezuela. Although tax auditors raided a Chevron office in Maracaibo in July, the company isn’t protesting while it awaits a possible back-tax bill. Vice chairman Peter Robertson insists Chevron has “a good, excellent relationship with the Venezuelan government.” His boss, CEO Dave O’Reilly, adds, “Venezuela will work its way through this. Ramírez is a very straight shooter.” Indeed, O’Reilly says Chevron would like to invest more in Venezuela.
After challenging some deductions and applying the tax hike retroactively, auditors recently slapped Shell with a $132 million tax claim. But the head of Shell’s operations in Venezuela, Sean Rooney, isn’t complaining. “The government of Venezuela is auditing the majority of oil companies’ returns,” he says. “We were lucky enough to be the first.” In fact, Rooney is determined to stay, come what may. “It is hard to turn away from the tremendous opportunities in Venezuela,” he says. “The Venezuelans can and will be extracting higher rents, and we expect and accept that. We are prepared to pay more when the opportunity merits.”
The only foreign giant fighting hard against Ramírez’s moves is Exxon. It’s threatening to sue the Venezuelan government and bring international arbitration proceedings, citing the legal sanctity of the original contracts. But Ramírez is betting it won’t go that far. He hasn’t spoken to Exxon CEO Lee Raymond directly but says, “I have a hunch that they finally read the clauses of the contract and realize we are right.” An Exxon spokesperson says that while arbitration remains an option, the company “wishes to explore an amicable resolution.”
Ramírez has an ace up his sleeve in negotiating with Big Oil—Asian rivals eager for a foothold. Any Western corporation that exits Venezuela could eventually be replaced by a Chinese or Indian firm. The flirtation is mutual. Ramírez himself went to Beijing in August to open PDVSA’s first office in China. And an agreement signed in June calls for Venezuela to supply 30,000 barrels of fuel oil to China. As Ramírez says, “There is a lot of interest from China and India, that’s a brand new condition.… Yes, they have huge, deep pockets.”
A longtime friend of Chavez who founded a natural-gas company before going to work for PDVSA, Ramírez speaks in a soothing voice that’s barely above a whisper. But his message is a provocative one in a country whose rocky relationship with Big Oil goes all the way back to the Rockefellers and the first Venezuelan wells in the 1930s.
Of course, fresh oil is a lot harder to find now than it was then, and Western giants like Shell desperately need new prospects around the world. So the case of Venezuela is just one more example of the way regimes from Russia to Nigeria to Kazakhstan are challenging Big Oil for a larger slice of the burgeoning profit pie, says PFC’s Cordray. “These big oil companies are used to operating in some of the most unfriendly political environments on earth,” he says. And with the last potential gushers increasingly in government hands in places like Kuwait, Saudi Arabia, and Russia, there’s really nowhere else to go. “It would be hard for me to see a scenario where they just up and walk away from Venezuela,” says Cordray.
As for Ramírez, he is well aware that Exxon is on track to earn more than $30 billion this year, and he naturally thinks that kind of windfall would be better spent by Chavez on social programs. “We are a country with huge resources, but we have millions of poor people—80% of the population is poor,” he says. “We have work to do.”
Omar Bravo is not political. In a country that’s fiercely divided between Chavistas and los escualidos (“the squalid ones,” as anti-Chavistas are known), the deputy manager of Venezuela’s biggest refinery happily describes himself as a pragmatist. When PDVSA’s workforce went on strike to protest Chavez’s left-wing policies, Bravo crossed the picket lines and stayed. “I was doing what I had to do, saving my job,” he says. Bravo’s wife of 30 years, Irma, saw things very differently—she supported the PDVSA workers who walked off the job and were subsequently fired by Chavez. Indeed, at the height of the strike, she joined them in nightly protests outside the Bravo home, a few miles from the refinery.
“I don’t like this government—I am a democratic person and I believe in freedom,” Irma says, sitting next to her frowning husband in their sunny living room. “You have to wear a red hat to work in this country,” she adds, referring to a popular Chavista symbol. “That’s not true!” Omar Bravo exclaims. “Typical escualida. Typical.” In the two years since the strike, the Bravos have reconciled—mostly. That’s not the case for other PDVSA workers. Friends and neighbors who were fired for striking still won’t come over or talk to Omar Bravo. “Many of them are still unemployed or driving taxis or selling cheese on the street. But it was wrong to strike—Venezuela’s economy depends on PDVSA,” says Omar.
Indeed it does—a third of its GNP is generated by oil, and energy accounts for 80% of its exports. So PDVSA is watched by Venezuelans with a passion usually reserved for soccer teams—it even has its own radio station, 105.7 on the FM dial. These days, PDVSA is the subject of a fierce debate over just how much damage the strike caused and whether Chavez’s policies will further weaken it.
PDVSA may be state-owned, but its daily production rivals that of foreign giants like Total. If it falters, that could create a shortfall for refineries on the Gulf Coast. Critics like former PDVSA chairman Luis Giusti say management isn’t investing enough to develop new projects. Instead, he says, PDVSA is merely scrambling to pump as much oil out of the ground as it can now to fund Chavez’s social programs. “There were political pressures in the past, but PDVSA was run like a private company,” says Giusti. “Now it’s part of the state, and it’s been severely mismanaged. We’ve gone back 20 years.”
Ramírez and other execs admit that the strike—they call it “the sabotage”—crippled the company. But Ramírez insists that Venezuela’s output has recovered and now stands at 3.3 million barrels a day. The U.S. Department of Energy and outside observers like Giusti say Venezuela’s daily production is more like 2.6 million barrels. That adds up to billions in lost income for PDVSA and the Venezuelan people, says Giusti.
In Caracas this summer, Ramírez and other PDVSA officials promised FORTUNE that a long-delayed 2003 SEC filing was “weeks away.” It has yet to appear, and prospects for the 2004 report to the SEC are murkier than the waters of Lake Maracaibo. But they did open the books to go over what they say are the company’s latest results. Through May 2005, according to PDVSA director Eudomario Carruyo, the company’s sales totaled $31 billion, and it’s on track to ring up $75 billion for the full year. That’s up from $64 billion last year. Net profits totaled $3.4 billion for the first five months of 2005.
That windfall, says Carruyo, will enable PDVSA to spend the billions it has earmarked for social programs, while leaving $5.6 billion for new projects. Carruyo is confident the company will never have to choose between money for social programs and finding oil. “Oil prices might drop,” he says, “but it will never drop below $50.”
It’s not just PDVSA’s future that’s being wagered on high oil prices—so are the expectations of ordinary Venezuelans. In the poor Caracas neighborhood of Sucre, a shedlike former public bathroom has been converted into an educational center for adults. A circle of middle-aged men and women go over the day’s lessons. “We’re here because of PDVSA,” says the center’s director, Juan Eduardo Mendoza. Critics like Giusti may worry that Ramirez is spending the oil windfall rather than investing it in PDVSA, but ordinary Venezuelans like Mendoza don’t want to hear it. “If Chavez believes in Ramírez, we believe in him. Before, we didn’t even know about PDVSA. Now the whole country knows who Rafael Ramírez is.”
The world, too, is beginning to know the extent of Venezuela’s oil ambitions. But despite Chavez’s outrageous rhetoric and occasional threats, the crude will most likely keep flowing north. If he has his way—and there’s no reason to suppose he won’t—American oil companies and consumers alike are going to end up paying more for it.
Reporter Associate Jenny Mero
Feedback nschwartz@fortunemail.com
<font size="5"><center>CRUDE REALITIES: LIVING WITH CHAVEZ</font size>
<font size="4">Oil’s New Mr. Big</font size>
<font size="3">Part Two</font size></center>
Like all skilled actors and politicians, Ramírez and Chavez are keenly aware of their audience. They walk a fine line, alternately assuring Americans that Venezuela will continue to supply El Norte with 1.6 million barrels of crude a day and telling Venezuelans that they will cut America’s energy lifeline if the Bush administration makes any hostile moves against Caracas. Given the history of U.S. intervention in Latin America—encouraging the overthrow of Salvador Allende in Chile, the removal of Panama’s Manuel Noriega by the first President Bush—it’s no surprise that many Venezuelans think a U.S. invasion is a real possibility. Yet while the current President Bush would be happy to see Chavez replaced by a more pro-Western leader, any military action is unthinkable as long as the oil keeps flowing.
And despite this former paratrooper’s authoritarian tendencies—he attempted to seize power in a coup six years before being elected democratically in 1998 and has recently tried to intimidate opponents through arrests and a new law aimed at the press—Chavez is hardly Fidel. At least not yet. Most privately owned media in Venezuela remain critical of Chavez, and U.S. companies have a major presence. In downtown Caracas, a sign urging solidarity with Chavez’s Bolivarian revolution sits next to a huge green-and-white IBM billboard.
For the most part, the macho talk coming out of Caracas is just that. As Ramírez himself notes, America’s location and enormous demand make it Venezuela’s most natural customer. But the image of standing up to the U.S. plays well in the ranchitos, the Caracas slums that are Chavez’s political stronghold. (Chavez has nicknamed Bush “Mr. Danger,” while Defense Secretary Donald Rumsfeld is “Mr. War.”) As Chavez knows, this kind of rhetoric has helped keep his political idol Castro in power through ten U.S. presidencies.
Still, foreign oil giants are definitely feeling the heat. In fact, the Venezuelan tax authority has created a special branch focusing exclusively on private oil companies. Ramírez accuses Big Oil of systematically cheating on their taxes, and back-tax claims of at least $1 billion are likely. Is this the start of a campaign akin to the Kremlin’s attack on Yukos, the Russian oil giant that was bankrupted and then nationalized after being hit with back-tax penalties? “I don’t think the situation is that bad,” says Ramírez. “Most companies are willing to pay, and they are paying.”
The key element in Ramírez’s squeeze play is the forced renegotiation of 32 operating agreements under which foreign firms pump 500,000 barrels a day of oil that they deliver to PDVSA for a set fee. Instead of the old 34% levy, profits from these deals will be taxed at a 50% rate. And rather than operating agreements, Ramírez is insisting on joint ventures, with Venezuela controlling at least 51%. By forcibly rewriting the contracts, Ramírez can earn more per barrel and also avoid paying hundreds of millions in incentive payments that were due to foreign companies under the old agreements. What’s more, in the tar sands of the Orinoco belt, where Exxon, Total, Chevron, and others have separate agreements and have invested billions to extract oil from what’s basically asphalt, royalties on each barrel of oil are being raised from 1% to nearly 17%.
The new terms haven’t been finalized, but they’re not just being applied to U.S. giants; all foreign companies, including NOCs like Brazil’s Petrobras and China’s CNPC, are being hit. Most, if not all, are likely to swallow the changes Ramírez is imposing. If they don’t go along, they’ll lose access to Venezuela’s 80 billion barrels of proven oil reserves—one of the biggest energy prizes on the planet.
That’s why powerhouses like Chevron have adopted a remarkably accommodating stance toward Venezuela. Although tax auditors raided a Chevron office in Maracaibo in July, the company isn’t protesting while it awaits a possible back-tax bill. Vice chairman Peter Robertson insists Chevron has “a good, excellent relationship with the Venezuelan government.” His boss, CEO Dave O’Reilly, adds, “Venezuela will work its way through this. Ramírez is a very straight shooter.” Indeed, O’Reilly says Chevron would like to invest more in Venezuela.
After challenging some deductions and applying the tax hike retroactively, auditors recently slapped Shell with a $132 million tax claim. But the head of Shell’s operations in Venezuela, Sean Rooney, isn’t complaining. “The government of Venezuela is auditing the majority of oil companies’ returns,” he says. “We were lucky enough to be the first.” In fact, Rooney is determined to stay, come what may. “It is hard to turn away from the tremendous opportunities in Venezuela,” he says. “The Venezuelans can and will be extracting higher rents, and we expect and accept that. We are prepared to pay more when the opportunity merits.”
The only foreign giant fighting hard against Ramírez’s moves is Exxon. It’s threatening to sue the Venezuelan government and bring international arbitration proceedings, citing the legal sanctity of the original contracts. But Ramírez is betting it won’t go that far. He hasn’t spoken to Exxon CEO Lee Raymond directly but says, “I have a hunch that they finally read the clauses of the contract and realize we are right.” An Exxon spokesperson says that while arbitration remains an option, the company “wishes to explore an amicable resolution.”
Ramírez has an ace up his sleeve in negotiating with Big Oil—Asian rivals eager for a foothold. Any Western corporation that exits Venezuela could eventually be replaced by a Chinese or Indian firm. The flirtation is mutual. Ramírez himself went to Beijing in August to open PDVSA’s first office in China. And an agreement signed in June calls for Venezuela to supply 30,000 barrels of fuel oil to China. As Ramírez says, “There is a lot of interest from China and India, that’s a brand new condition.… Yes, they have huge, deep pockets.”
A longtime friend of Chavez who founded a natural-gas company before going to work for PDVSA, Ramírez speaks in a soothing voice that’s barely above a whisper. But his message is a provocative one in a country whose rocky relationship with Big Oil goes all the way back to the Rockefellers and the first Venezuelan wells in the 1930s.
Of course, fresh oil is a lot harder to find now than it was then, and Western giants like Shell desperately need new prospects around the world. So the case of Venezuela is just one more example of the way regimes from Russia to Nigeria to Kazakhstan are challenging Big Oil for a larger slice of the burgeoning profit pie, says PFC’s Cordray. “These big oil companies are used to operating in some of the most unfriendly political environments on earth,” he says. And with the last potential gushers increasingly in government hands in places like Kuwait, Saudi Arabia, and Russia, there’s really nowhere else to go. “It would be hard for me to see a scenario where they just up and walk away from Venezuela,” says Cordray.
As for Ramírez, he is well aware that Exxon is on track to earn more than $30 billion this year, and he naturally thinks that kind of windfall would be better spent by Chavez on social programs. “We are a country with huge resources, but we have millions of poor people—80% of the population is poor,” he says. “We have work to do.”
Omar Bravo is not political. In a country that’s fiercely divided between Chavistas and los escualidos (“the squalid ones,” as anti-Chavistas are known), the deputy manager of Venezuela’s biggest refinery happily describes himself as a pragmatist. When PDVSA’s workforce went on strike to protest Chavez’s left-wing policies, Bravo crossed the picket lines and stayed. “I was doing what I had to do, saving my job,” he says. Bravo’s wife of 30 years, Irma, saw things very differently—she supported the PDVSA workers who walked off the job and were subsequently fired by Chavez. Indeed, at the height of the strike, she joined them in nightly protests outside the Bravo home, a few miles from the refinery.
“I don’t like this government—I am a democratic person and I believe in freedom,” Irma says, sitting next to her frowning husband in their sunny living room. “You have to wear a red hat to work in this country,” she adds, referring to a popular Chavista symbol. “That’s not true!” Omar Bravo exclaims. “Typical escualida. Typical.” In the two years since the strike, the Bravos have reconciled—mostly. That’s not the case for other PDVSA workers. Friends and neighbors who were fired for striking still won’t come over or talk to Omar Bravo. “Many of them are still unemployed or driving taxis or selling cheese on the street. But it was wrong to strike—Venezuela’s economy depends on PDVSA,” says Omar.
Indeed it does—a third of its GNP is generated by oil, and energy accounts for 80% of its exports. So PDVSA is watched by Venezuelans with a passion usually reserved for soccer teams—it even has its own radio station, 105.7 on the FM dial. These days, PDVSA is the subject of a fierce debate over just how much damage the strike caused and whether Chavez’s policies will further weaken it.
PDVSA may be state-owned, but its daily production rivals that of foreign giants like Total. If it falters, that could create a shortfall for refineries on the Gulf Coast. Critics like former PDVSA chairman Luis Giusti say management isn’t investing enough to develop new projects. Instead, he says, PDVSA is merely scrambling to pump as much oil out of the ground as it can now to fund Chavez’s social programs. “There were political pressures in the past, but PDVSA was run like a private company,” says Giusti. “Now it’s part of the state, and it’s been severely mismanaged. We’ve gone back 20 years.”
Ramírez and other execs admit that the strike—they call it “the sabotage”—crippled the company. But Ramírez insists that Venezuela’s output has recovered and now stands at 3.3 million barrels a day. The U.S. Department of Energy and outside observers like Giusti say Venezuela’s daily production is more like 2.6 million barrels. That adds up to billions in lost income for PDVSA and the Venezuelan people, says Giusti.
In Caracas this summer, Ramírez and other PDVSA officials promised FORTUNE that a long-delayed 2003 SEC filing was “weeks away.” It has yet to appear, and prospects for the 2004 report to the SEC are murkier than the waters of Lake Maracaibo. But they did open the books to go over what they say are the company’s latest results. Through May 2005, according to PDVSA director Eudomario Carruyo, the company’s sales totaled $31 billion, and it’s on track to ring up $75 billion for the full year. That’s up from $64 billion last year. Net profits totaled $3.4 billion for the first five months of 2005.
That windfall, says Carruyo, will enable PDVSA to spend the billions it has earmarked for social programs, while leaving $5.6 billion for new projects. Carruyo is confident the company will never have to choose between money for social programs and finding oil. “Oil prices might drop,” he says, “but it will never drop below $50.”
It’s not just PDVSA’s future that’s being wagered on high oil prices—so are the expectations of ordinary Venezuelans. In the poor Caracas neighborhood of Sucre, a shedlike former public bathroom has been converted into an educational center for adults. A circle of middle-aged men and women go over the day’s lessons. “We’re here because of PDVSA,” says the center’s director, Juan Eduardo Mendoza. Critics like Giusti may worry that Ramirez is spending the oil windfall rather than investing it in PDVSA, but ordinary Venezuelans like Mendoza don’t want to hear it. “If Chavez believes in Ramírez, we believe in him. Before, we didn’t even know about PDVSA. Now the whole country knows who Rafael Ramírez is.”
The world, too, is beginning to know the extent of Venezuela’s oil ambitions. But despite Chavez’s outrageous rhetoric and occasional threats, the crude will most likely keep flowing north. If he has his way—and there’s no reason to suppose he won’t—American oil companies and consumers alike are going to end up paying more for it.
Reporter Associate Jenny Mero
Feedback nschwartz@fortunemail.com
Re: Crude Realities: Living with Chavez
<font size="5"><center>Why Pat Robertson's Statements Help Hugo Chavez</font size>
<font size="4">The Venezuelan President has long thrived on criticism from the U.S.</font size></center>
TIME MAGAZINE
By TIM PADGETT
Posted Tuesday, Aug. 23, 2005
Venezuelan President Hugo Chavez has a new best friend this morning: television evangelist Pat Robertson. With his astonishing call for the left-wing leader's assassination last night—"I think that we really ought to go ahead and do it...We have the ability to take him out"—Robertson will have surely made Chavez an even more popular anti-yanqui icon in Venezuela, Latin America and around the world. Like his mentor Fidel Castro, Chavez thrives on threats from the U.S., real or perceived. He has long insisted that his foes are plotting to kill him, and this summer had armed civilians training with the Venezuelan military to prepare for what he says is an imminent U.S. invasion. A public effort to whack him, offered from the right-wing Christian establishment so closely aligned with President Bush, is just what Chavez needs to keep his approval ratings soaring as high as the price of the Venezuelan oil he controls, the largest crude reserves in the hemisphere.
Chavez is no doubt a source of concern for Washington, if only because Venezuela is America's fourth-largest foreign oil supplier. Chavez's erratic and often bellicose anti-U.S. rhetoric—he publicly called Bush an "ass____" in Spanish last year—as well as his desire to sell less oil to the U.S. and more to ideological allies like China, are hardly comforting as gas nears $3 per gallon. But neither is Chavez's embrace of nations like Iran, and nor is the fact that he's leading a politically potent (and, to the Bush Administration, potentially destabilizing) wave of angry neo-leftism in Latin America, from Argentina to Mexico.
But Chavez holds cards that make remarks like Robertson's all the more incendiary on the Latin American street, where language like "U.S. imperialism" suddenly has currency again. One is the past: Latin Americans have too many vivid and bitter memories of U.S. intervention in their countries—operations that sometimes included brazen assassinations —which is why the Bush Administration got burned by accusations it backed a failed coup against Chavez in 2002 (the White House denies the charge). Another is democratic legitimacy: Chavez, for all his authoritarian tendencies, is a democratically elected head of state who last year won a national recall referendum approved by international observers.
Perhaps an even more important factor is populist backing: leftism is on the rise again in Latin America for a reason, namely the burgeoning feeling around the region that a decade of U.S.-backed capitalist reforms has simply widened an already epic gap between rich and poor—and that the Bush Administration is indifferent to it. As Chavez uses his multi-billion-dollar oil revenues to fund the kind of social projects that Venezuela's legions of impoverished never saw from his kleptocratic predecessors—and to subsidize cheaper oil for his cash-strapped Latin neighbors—more people are willing to defend him, as most Latin leaders did last spring when Secretary of State Condoleezza Rice toured South America.
As a result, any cold war-style talk about "taking Chavez out" with "covert operatives," as Robertson suggested, just confers more Che Guevara cachet on the former army lieutenant colonel (who himself led a failed coup in 1992). And since Chavez has threatened to cut off oil exports to the U.S. at the first sign of gringo aggression, it makes America's important Venezuelan oil supply look all the more volatile.
http://www.time.com/time/world/article/0,8599,1097267,00.html
<font size="5"><center>Why Pat Robertson's Statements Help Hugo Chavez</font size>
<font size="4">The Venezuelan President has long thrived on criticism from the U.S.</font size></center>
TIME MAGAZINE
By TIM PADGETT
Posted Tuesday, Aug. 23, 2005
Venezuelan President Hugo Chavez has a new best friend this morning: television evangelist Pat Robertson. With his astonishing call for the left-wing leader's assassination last night—"I think that we really ought to go ahead and do it...We have the ability to take him out"—Robertson will have surely made Chavez an even more popular anti-yanqui icon in Venezuela, Latin America and around the world. Like his mentor Fidel Castro, Chavez thrives on threats from the U.S., real or perceived. He has long insisted that his foes are plotting to kill him, and this summer had armed civilians training with the Venezuelan military to prepare for what he says is an imminent U.S. invasion. A public effort to whack him, offered from the right-wing Christian establishment so closely aligned with President Bush, is just what Chavez needs to keep his approval ratings soaring as high as the price of the Venezuelan oil he controls, the largest crude reserves in the hemisphere.
Chavez is no doubt a source of concern for Washington, if only because Venezuela is America's fourth-largest foreign oil supplier. Chavez's erratic and often bellicose anti-U.S. rhetoric—he publicly called Bush an "ass____" in Spanish last year—as well as his desire to sell less oil to the U.S. and more to ideological allies like China, are hardly comforting as gas nears $3 per gallon. But neither is Chavez's embrace of nations like Iran, and nor is the fact that he's leading a politically potent (and, to the Bush Administration, potentially destabilizing) wave of angry neo-leftism in Latin America, from Argentina to Mexico.
But Chavez holds cards that make remarks like Robertson's all the more incendiary on the Latin American street, where language like "U.S. imperialism" suddenly has currency again. One is the past: Latin Americans have too many vivid and bitter memories of U.S. intervention in their countries—operations that sometimes included brazen assassinations —which is why the Bush Administration got burned by accusations it backed a failed coup against Chavez in 2002 (the White House denies the charge). Another is democratic legitimacy: Chavez, for all his authoritarian tendencies, is a democratically elected head of state who last year won a national recall referendum approved by international observers.
Perhaps an even more important factor is populist backing: leftism is on the rise again in Latin America for a reason, namely the burgeoning feeling around the region that a decade of U.S.-backed capitalist reforms has simply widened an already epic gap between rich and poor—and that the Bush Administration is indifferent to it. As Chavez uses his multi-billion-dollar oil revenues to fund the kind of social projects that Venezuela's legions of impoverished never saw from his kleptocratic predecessors—and to subsidize cheaper oil for his cash-strapped Latin neighbors—more people are willing to defend him, as most Latin leaders did last spring when Secretary of State Condoleezza Rice toured South America.
As a result, any cold war-style talk about "taking Chavez out" with "covert operatives," as Robertson suggested, just confers more Che Guevara cachet on the former army lieutenant colonel (who himself led a failed coup in 1992). And since Chavez has threatened to cut off oil exports to the U.S. at the first sign of gringo aggression, it makes America's important Venezuelan oil supply look all the more volatile.
http://www.time.com/time/world/article/0,8599,1097267,00.html
Re: Crude Realities: Living with Chavez
I doubt seriously the F-16's will ever reach China or Cuba. I doubt Chavez will actually try to make the transfer and if he does, well ... they may just cease to exist in any usable form.
The essence of all this, as I see it, is Chavez findings ways to continue his running row with GW while not actually moving it to the point of things going <u>Hot</u>. Regardless of who is right, Chavez just wants the propaganda affect -- he neither wants nor dreams of things turning Hot. Do you think he does ???
.
I doubt seriously the F-16's will ever reach China or Cuba. I doubt Chavez will actually try to make the transfer and if he does, well ... they may just cease to exist in any usable form.
The essence of all this, as I see it, is Chavez findings ways to continue his running row with GW while not actually moving it to the point of things going <u>Hot</u>. Regardless of who is right, Chavez just wants the propaganda affect -- he neither wants nor dreams of things turning Hot. Do you think he does ???
.
Chavez
Honestly? The whole world needs oil but the whole world doesn't have Citgo stations sending billions in hurricane inflated gasoline money back to Venezuela. Its brinksmanship. But its brinksmanship that Chavez didn't start. Its not like they are stealth bombers. That whole part of the ongoing bullshit is all propaganda affect for both sides. Iran has F-16s (older) and Musharaff turned down purchasing his long awaited F-16s today because of the earthquake damages in the Billions.
I don't see the US seizing Citgo or bombing his ass like Qaddafi in the 80s. Reagan would have tried to kill Chavez's ass about 20 times by now lol kill his children and take a nap n shit
Honestly? The whole world needs oil but the whole world doesn't have Citgo stations sending billions in hurricane inflated gasoline money back to Venezuela. Its brinksmanship. But its brinksmanship that Chavez didn't start. Its not like they are stealth bombers. That whole part of the ongoing bullshit is all propaganda affect for both sides. Iran has F-16s (older) and Musharaff turned down purchasing his long awaited F-16s today because of the earthquake damages in the Billions.
I don't see the US seizing Citgo or bombing his ass like Qaddafi in the 80s. Reagan would have tried to kill Chavez's ass about 20 times by now lol kill his children and take a nap n shit
Re: Chavez
L<font size="5"><center>Venezuela: The U.S. Honors a Deal to Protect Business</font size></center>
STRATFOR
Intelligence Brief
November 16, 2005
Summary
The United States continues to comply with a 20-year-old contract covering replacement parts for Venezuela's F-16 fighters, U.S. Ambassador to Venezuela William Brownfield said Nov. 15. Venezuela has complained that the United States has withheld such parts, which Caracas saw as a breach of the agreement. Brownfield's statement illustrates that Washington is not afraid of Venezuela's President Hugo Chavez's anti-American rhetoric, and will uphold deals to protect future contracts worldwide.
Analysis
U.S. Ambassador to Venezuela William Brownfield said Nov. 15 that the United States continues to comply with Caracas' request to supply replacement parts for Venezuela's F-16 fighters.
Brownfield said the last shipment was sent Nov. 4, 2005, implying that Venezuelan President Hugo Chavez's complaints regarding the alleged U.S. failure to send the parts were unnecessary. Brownfield's statement shows that Washington is far too preoccupied with other issues to jeopardize future military contracts over its tempestuous relationship with Chavez.
The most recent spat between Venezuela and the United States began in late October, when Washington blocked both Israel and Spain from selling military equipment to Venezuela. Israel froze a $100 million contract to update Venezuela's F-16s, citing U.S. pressure. For its part, Spain planned to sell ten CASA C-295 cargo planes until the United States voiced concerns that proprietary regulations limited the sale of radar and turboprop technology owned by U.S. firms, and that technology was deemed sensitive. In fact, Spain and Israel would have violated well-known contractual regulations on the sale of U.S. military equipment had they proceeded with their respective deals.
Chavez, who expressed his interest in improving and increasing Venezuela's military capabilities early in 2005, retaliated Nov. 1 by threatening to sell F-16s to either Cuba or China. The move did not scare U.S. officials, who believe -- and want to convey their view -- that Chavez constitutes nothing more than a regional annoyance. The United States wants to prove to the rest of Latin America -- where President George W. Bush and U.S. policies are wildly unpopular -- that Venezuela and Chavez's anti-American tirades are easily quelled and ignored. The United States simultaneously squelched Chavez's claim that it violated the contract and demonstrated that Washington cares about upholding deals in Latin America.
Although among the most modern combat aircraft in South America and representing Chavez's most potent military weapon, the two squadrons of F-16s operated by the Venezuelan air force consist of 20-plus-year-old aircraft from the fighter's first version, the F-16A. Except for their general appearance, they share little in common with the U.S. Air Force's newer F-16Cs, and would not represent a significant obstacle to the United States should Washington elect to use a military option against Chavez. Washington therefore sacrifices relatively little in supplying the spare parts.
A desire to ensure future military contracts with the international community also motivated Washington's decision, a decision made all the more urgent by the accelerating acquisition of military hardware by South American countries. Brazil, for example, is in the process of acquiring Mirage fighters from France, and both Colombia and Argentina are looking for new military equipment as well. By keeping to its contract with Caracas, Washington will not discourage other potential customers from purchasing U.S. hardware out of fear of being cut off from supplies should political relations between seller and buyer deteriorate.
Moreover, halting the sale of aircraft parts to Venezuela would have required an act of Congress or an arms embargo, both of which would have made Chavez appear geopolitically more important than Washington would like. Ultimately, Washington faces more pressing issues -- including Iraq and Supreme Court nominees -- and has neither the time nor the patience to deal with Chavez.
Send questions or comments on this article to analysis@stratfor.com.
L<font size="5"><center>Venezuela: The U.S. Honors a Deal to Protect Business</font size></center>
STRATFOR
Intelligence Brief
November 16, 2005
Summary
The United States continues to comply with a 20-year-old contract covering replacement parts for Venezuela's F-16 fighters, U.S. Ambassador to Venezuela William Brownfield said Nov. 15. Venezuela has complained that the United States has withheld such parts, which Caracas saw as a breach of the agreement. Brownfield's statement illustrates that Washington is not afraid of Venezuela's President Hugo Chavez's anti-American rhetoric, and will uphold deals to protect future contracts worldwide.
Analysis
U.S. Ambassador to Venezuela William Brownfield said Nov. 15 that the United States continues to comply with Caracas' request to supply replacement parts for Venezuela's F-16 fighters.
Brownfield said the last shipment was sent Nov. 4, 2005, implying that Venezuelan President Hugo Chavez's complaints regarding the alleged U.S. failure to send the parts were unnecessary. Brownfield's statement shows that Washington is far too preoccupied with other issues to jeopardize future military contracts over its tempestuous relationship with Chavez.
The most recent spat between Venezuela and the United States began in late October, when Washington blocked both Israel and Spain from selling military equipment to Venezuela. Israel froze a $100 million contract to update Venezuela's F-16s, citing U.S. pressure. For its part, Spain planned to sell ten CASA C-295 cargo planes until the United States voiced concerns that proprietary regulations limited the sale of radar and turboprop technology owned by U.S. firms, and that technology was deemed sensitive. In fact, Spain and Israel would have violated well-known contractual regulations on the sale of U.S. military equipment had they proceeded with their respective deals.
Chavez, who expressed his interest in improving and increasing Venezuela's military capabilities early in 2005, retaliated Nov. 1 by threatening to sell F-16s to either Cuba or China. The move did not scare U.S. officials, who believe -- and want to convey their view -- that Chavez constitutes nothing more than a regional annoyance. The United States wants to prove to the rest of Latin America -- where President George W. Bush and U.S. policies are wildly unpopular -- that Venezuela and Chavez's anti-American tirades are easily quelled and ignored. The United States simultaneously squelched Chavez's claim that it violated the contract and demonstrated that Washington cares about upholding deals in Latin America.
Although among the most modern combat aircraft in South America and representing Chavez's most potent military weapon, the two squadrons of F-16s operated by the Venezuelan air force consist of 20-plus-year-old aircraft from the fighter's first version, the F-16A. Except for their general appearance, they share little in common with the U.S. Air Force's newer F-16Cs, and would not represent a significant obstacle to the United States should Washington elect to use a military option against Chavez. Washington therefore sacrifices relatively little in supplying the spare parts.
A desire to ensure future military contracts with the international community also motivated Washington's decision, a decision made all the more urgent by the accelerating acquisition of military hardware by South American countries. Brazil, for example, is in the process of acquiring Mirage fighters from France, and both Colombia and Argentina are looking for new military equipment as well. By keeping to its contract with Caracas, Washington will not discourage other potential customers from purchasing U.S. hardware out of fear of being cut off from supplies should political relations between seller and buyer deteriorate.
Moreover, halting the sale of aircraft parts to Venezuela would have required an act of Congress or an arms embargo, both of which would have made Chavez appear geopolitically more important than Washington would like. Ultimately, Washington faces more pressing issues -- including Iraq and Supreme Court nominees -- and has neither the time nor the patience to deal with Chavez.
Send questions or comments on this article to analysis@stratfor.com.
Re: Chavez
Oil for Bx. poor is a foreign gift
Santa Claus, make way for Santa Chavez.
Poor residents and nonprofit groups in the South Bronx are about to receive a huge Christmas gift from Venezuela's firebrand President Hugo Chavez: Eight-million gallons of heating oil at bargain-basement prices.
Two months ago, in an interview with the Daily News during his visit to the United Nations, Chavez first made the startling offer of cheap fuel for this winter from his oil-rich country to a handful of poor communities in the United States.
At the time, critics of the radical populist Chavez, the Bush administration's biggest nemesis in South America, scoffed at his proposal.
But the Venezuelan leader is about to deliver.
"The first shipments of low-cost fuel from CITGO will begin arriving in my district by late next week," U.S. Rep. Jose Serrano (D-South Bronx) said yesterday.
CITGO, the Houston-based subsidiary of Venezuela's national oil company, owns 14,000 gas stations and eight refineries in the U.S. Because of that, Chavez has a ready-made distribution system and doesn't need any special approvals from the White House for his project.
"My constituents are facing some of the highest energy bills in recent history, even as oil companies are reporting the largest profits in recent memory," Serrano said. "I'm very pleased to have helped broker this historic agreement."
The Bronx congressman has been working feverishly for weeks to connect local nonprofit groups with CITGO and Venezuelan government officials. The South Bronx plan is similar to one announced yesterday in Boston for CITGO to supply 12 million gallons of discounted heating oil to 45,000 low-income families and nonprofits in Massachusetts.
Under the Chavez plan, CITGO will sell oil for way below the market price - about $1.35 a gallon instead of the current average of $2.25. The average Massachusetts homeowner would save about $180 for each 200-gallon shipment, enough to last about three weeks.
But the South Bronx project is a little more complicated because so many low-income residents live in rental apartments instead of individual homes.
"The Venezuelans want to make sure landlords don't pocket all the savings," Serrano said.
You can be sure, if there's a way to do so, New York City landlords will find it.
That's why Serrano recruited several local nonprofit housing corporations to be the first to join the discount-fuel program.
To assure that the bulk of savings are passed on to residents, not just to the nonprofit corporation, lawyers for CITGO are working out a pilot effort in which every renter will receive a cash voucher equal to the average fuel savings for each unit in the building.
"The idea is to make sure the financial help goes directly to the poor, not the middle man," Serrano said.
Details are still being ironed out by lawyers for all sides, Serrano said, which is why he will not announce the specific housing groups and buildings to receive the first fuel shipments until a press conference late next week.
"We'll start with a few groups, then expand it throughout the winter," Serrano said. Homeowners aren't the only ones eligible: Even schools in low-income areas could apply for the program.
In his interview with me two months ago, Chavez vowed to set aside 10% of all the oil that CITGO refineries produce for his oil-for-the-poor program.
His government is already directing hundreds of millions of dollars from its windfall petroleum profits to expand social programs for Venezuela's own poor, and it has begun providing cheap oil to more than a dozen poor Caribbean nations.
To the people at the Bush White House and their buddies at the Big Oil companies, sharing the wealth with those less fortunate is a dangerous idea.
Santa Claus is for children, they say, and profits are for shareholders, and this Chavez guy is giving oil a bad name.
Originally published on November 22, 2005
http://www.nydailynews.com/news/local/story/367930p-313135c.html
and american oil companies?
Oil for Bx. poor is a foreign gift
Santa Claus, make way for Santa Chavez.
Poor residents and nonprofit groups in the South Bronx are about to receive a huge Christmas gift from Venezuela's firebrand President Hugo Chavez: Eight-million gallons of heating oil at bargain-basement prices.
Two months ago, in an interview with the Daily News during his visit to the United Nations, Chavez first made the startling offer of cheap fuel for this winter from his oil-rich country to a handful of poor communities in the United States.
At the time, critics of the radical populist Chavez, the Bush administration's biggest nemesis in South America, scoffed at his proposal.
But the Venezuelan leader is about to deliver.
"The first shipments of low-cost fuel from CITGO will begin arriving in my district by late next week," U.S. Rep. Jose Serrano (D-South Bronx) said yesterday.
CITGO, the Houston-based subsidiary of Venezuela's national oil company, owns 14,000 gas stations and eight refineries in the U.S. Because of that, Chavez has a ready-made distribution system and doesn't need any special approvals from the White House for his project.
"My constituents are facing some of the highest energy bills in recent history, even as oil companies are reporting the largest profits in recent memory," Serrano said. "I'm very pleased to have helped broker this historic agreement."
The Bronx congressman has been working feverishly for weeks to connect local nonprofit groups with CITGO and Venezuelan government officials. The South Bronx plan is similar to one announced yesterday in Boston for CITGO to supply 12 million gallons of discounted heating oil to 45,000 low-income families and nonprofits in Massachusetts.
Under the Chavez plan, CITGO will sell oil for way below the market price - about $1.35 a gallon instead of the current average of $2.25. The average Massachusetts homeowner would save about $180 for each 200-gallon shipment, enough to last about three weeks.
But the South Bronx project is a little more complicated because so many low-income residents live in rental apartments instead of individual homes.
"The Venezuelans want to make sure landlords don't pocket all the savings," Serrano said.
You can be sure, if there's a way to do so, New York City landlords will find it.
That's why Serrano recruited several local nonprofit housing corporations to be the first to join the discount-fuel program.
To assure that the bulk of savings are passed on to residents, not just to the nonprofit corporation, lawyers for CITGO are working out a pilot effort in which every renter will receive a cash voucher equal to the average fuel savings for each unit in the building.
"The idea is to make sure the financial help goes directly to the poor, not the middle man," Serrano said.
Details are still being ironed out by lawyers for all sides, Serrano said, which is why he will not announce the specific housing groups and buildings to receive the first fuel shipments until a press conference late next week.
"We'll start with a few groups, then expand it throughout the winter," Serrano said. Homeowners aren't the only ones eligible: Even schools in low-income areas could apply for the program.
In his interview with me two months ago, Chavez vowed to set aside 10% of all the oil that CITGO refineries produce for his oil-for-the-poor program.
His government is already directing hundreds of millions of dollars from its windfall petroleum profits to expand social programs for Venezuela's own poor, and it has begun providing cheap oil to more than a dozen poor Caribbean nations.
To the people at the Bush White House and their buddies at the Big Oil companies, sharing the wealth with those less fortunate is a dangerous idea.
Santa Claus is for children, they say, and profits are for shareholders, and this Chavez guy is giving oil a bad name.
Originally published on November 22, 2005
http://www.nydailynews.com/news/local/story/367930p-313135c.html
and american oil companies?
Good thread. What's not to like about the guy.
let me guess, one kook says do away with term limits and you attribute that to all of america. people wanted clinton in for another term, can i be stupid and say the whole country thought that way.
shit is highly unlikely in america. however, the odds arent improbable in your beloved venezuela.
and no matter what country we're talking about its a bad thing.
i know i know, i shouldnt say that because chavez is a "leftist." he only wants good things. blah blah blah.
shit is highly unlikely in america. however, the odds arent improbable in your beloved venezuela.
and no matter what country we're talking about its a bad thing.
i know i know, i shouldnt say that because chavez is a "leftist." he only wants good things. blah blah blah.
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