To play devil's advocate for a minute, while removing 12% of US imports from the market would certainly have a negative impact on American pocket books, especially those at the margins who can least afford any significant price increase at the pump, are there any unintended consequences we could live with? After watching "Hot Politics" I realized that our elected officials are unable or unwilling to make the policy choices necessary to ween us from our oil addiction and as long the average American isn't financial 'put-out', you won't see mass protests.
So imagine for a second if Chavez did pull their oil from the market, we might actually hit the "rock bottom" we need to in order to make the changes to our energy policy that thus far we've been unable to. Furthermore, if we stopped funding Chavez by buying their oil, Venezuela's overall importance in the region and the world stage would shrink back. Chavez would be unable to continue funding 'unfriendly' Latin American regimes, supporting Socialist, leftist governments, etc. That wouldn't be such a bad side effect...
So while I realize the economics of this scenario wouldn't work, I guess my post is intended to express my pessimism towards finding an energy solution. If hitting rock bottom, be it a peak oil crisis, $5/gallon gasoline or obscenely high numbers of asthma in children, is the catalyst we need to enact sensible Energy policy, then god help us all!
1 comment:
I would say that to add to your pessimism, the probability of Chavez halting oil sales to the United States is extremely low.
While the United States imports a considerable amount of oil from Venezuela and it would suffer a moderate shock if that supply stops, it cannot be compared to what would happen to Venezuela itself. According to the Council of Foreign Relations, the United States buys approximately 60 percent of all Venezuela's oil exports. http://www.cfr.org/publication/12089/venezuelas_oilbased_economy.html
Suspending oil exports to the United States would be suicidal to Chavez. One way he could have done some damage would have been by interrupting production of refined products in the refineries that CITGO (Petroleos de Venezuela's subsidiary in the United States) owned. However, Chavez started to disinvest since last year the SEC required more transparent financial reports. He's not having that leverage anymore.
What Chavez has been trying to do is to diversify his clients and start selling more oil to countries like China and India. However, most of Venezuela's oil is heavy, and the growth in exports is limited by those countries' capacity to build refining plants for Venezuelan oil.
As it has been evidenced by other not very successful agreements, like the one signed with Ecuador, Venezuela doesn't have enough refining capacity either. And Chavez is not reinvesting his oil money in new refineries or exploration, but rather in subsidizing foreign ventures and white elephant projects (like a proposed mega gas pipeline that would cover a good portion of South America).
It is more likely that an oil disruption to the United States could come still from the Middle East or Nigeria than from Venezuela.
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