Chavez wants fixed oil price

[inteller]

I'd like to see this guy twist in the wind.

http://www.upi.com/Top_News/2008/11/25/Venezuelas_Chavez_calls_for_fix_oil_price/UPI-89111227613671/

If $50 oil is bringing this turd pain then I say let's shoot for $30 and call it mission accomplished.

[cannon_fodder]

+1

He's a populist dictator trying to orchestrate a cult of the personality.  And failing.

Crime is up several fold (murder is purportedly the leading cause of death in Caracas).  Oil production is down nearly 33%.  Their refined products on oil are nearly non-existent as they drove the private companies out.  Food production is down 25%.  Mining output is way off (trust me, I bought into a competitors copper mine when VZ started nationalizing industry, worked out well for me).  The state has taken over telecom and electrical generation... both or which are now sporadic. Foreign investment has dried up.  Real wages are dropping like a rock.  Unemployment is up.  Essentially his grand socialist economy is faltering.

Even oil was really keeping it afloat.  He sold oil to bribe neighbors to like him.  Offering huge discounts and delayed payments.  The USA is their only paying customer.  So even on the reduced level of production they managed to bring in less money with higher prices.

That's not mentioning the repression.  State controlled media.  Alleged assassinations.  The right to pass laws by decree.  Extended term limits.  Supporting drug cartels in Columbia.

The guy is bad news.  His deck of cards will fail or Venezuela will fail.  One good thing the Bush administration did was ignore him.  Let him be an donkey and make a one sided disagreement. I look forward to his demise.

[Red Arrow]

The "Beloved Fearless Leader" (For those old enough to remember Rocky & Bullwinkle) may soon find out who his real friends are, if he has any.  The sooner, the better.

[Hometown]

Did you hear that U.S. news report a couple of days ago explaining that the U.S. believes China and India will challenge U.S. world domination by 2025?

Anyway, Venezuela does have some friends.  Check this out.

Venezuela's Chavez in China to Sign New Deals
By Daniel Schearf
Beijing
23 September 2008

Venezuela's President Hugo Chavez is in China to sign agreements on economic cooperation. As Daniel Schearf reports from Beijing, China has released few details on the deals so far.

Hugo Chavez, right, arrives in Beijing
President Chavez arrived in Beijing Tuesday for a three-day visit.

Before arriving, Mr. Chavez said it was likely the two countries would agree to replenish a $6 billion joint development fund. China and Venezuela also are working out plans to construct oil tankers and at least one oil refinery in China. About four percent of China's imported oil comes from Venezuela.

http://www.voanews.com/english/archive/2008-09/2008-09-23-voa15.cfm?CFID=70181780&CFTOKEN=73619632

[we vs us]

Chavez's bet is that competition between established and up-and-coming nations will keep oil at a high enough price to sustain a nationalized -- rather than privatized -- oil industry.  It was a good bet 6 months ago, when oil prices were at $150.00 a barrel;  it's a really crappy bet right now, with oil just above $50.00.  Hence the push for price controls.  But you live by commodities, you die by commodities.  The new bet now is, can Chavez stay afloat long enough for prices to stabilize upward, or must he give back some/all of the nationalized oil industry to private interests.  

As HT pointed out, there's a good chance that he can pull it out, now that India and China are adding millions and millions of gas-guzzling consumers every year.  A multipolar world promises to make the life your average tin-pot dictator much easier.  After all, there's a better chance of survival if you have more than the US or the USSR to ally with.

[inteller]

quote:Originally posted by we vs us

Chavez's bet is that competition between established and up-and-coming nations will keep oil at a high enough price to sustain a nationalized -- rather than privatized -- oil industry.  It was a good bet 6 months ago, when oil prices were at $150.00 a barrel;  it's a really crappy bet right now, with oil just above $50.00.  Hence the push for price controls.  But you live by commodities, you die by commodities.  The new bet now is, can Chavez stay afloat long enough for prices to stabilize upward, or must he give back some/all of the nationalized oil industry to private interests.  

As HT pointed out, there's a good chance that he can pull it out, now that India and China are adding millions and millions of gas-guzzling consumers every year.  A multipolar world promises to make the life your average tin-pot dictator much easier.  After all, there's a better chance of survival if you have more than the US or the USSR to ally with.

actually india is a bigger (biggest?) user of CNG cars and I'm not sure they want to put their eggs in the handbasketcase known as Chavez.

[cannon_fodder]

quote:Originally posted by Hometown

Did you hear that U.S. news report a couple of days ago explaining that the U.S. believes China and India will challenge U.S. world domination by 2025?

Anyway, Venezuela does have some friends.  Check this out.
[September Article linked]

1)  Clearly China and India will pass us eventually in world influence.  With each have 4+ times the number of people that should be fairly evident.  Currently with 4 times the population China has 1/4th the GDP.  Per Capita GDP is more than $40,000 BEHIND the United States.

Military sending not even 1/10th.  

India is further behind that that on both accounts.

What I'm getting at is "overtaking us" in numbers may happen.  But with low per capita GDP their available influence will be limited.  Consumers can't consume if they hardly have enough to survive.

But, certainly their influence will grow.  Few people were under the illusion that a single hegemonic state was a long term situation.

2) Yes he has (had) friends.  I'm not saying people won't do business with him.  Where money, commodities, or other advantages can be found they will be exploited.  Clearly not for his sake.

Russia will sleep with anyone that is anti American (Iran, North Korea, Cuba, Venezuela) just out of habit.

And China will do business with anyone who has oil and sells it at a discount.  Now that oil is $50 a barrel instead of $135 (September article) I wonder how much they care.

[waterboy]

quote:Originally posted by Red Arrow

The "Beloved Fearless Leader" (For those old enough to remember Rocky & Bullwinkle) may soon find out who his real friends are, if he has any.  The sooner, the better.

Thats good.[] The "beloved fearless leader". He also reminds me of something out of a Marx bros. movie. His tenure is probably coming to an end.

[we vs us]

My question is, how do you fix a commodity price on the world market?  I didn't think OPEC had that kind of leverage over world producers.  Chavez certainly doesn't.  How is it even feasible?

[cannon_fodder]

Ask Da Beers about fixing commodity prices.

Or the US in helium in the 1930's.  

And to some extend OPEC can influence prices, though not fix them.

But basically, he can't and it can't.  If all the OPEC nations agreed to sell oil at $100 a barrel they might be able to force the issue.  They control about 50% of the production, so it would be an interesting exercise.

However, it would likely fail for several reasons:  

First, other countries would have a great incentive to get production on line and/or use alternative energy.   If we knew oil was going to be pegged at $100 a barrel we know what the cost of that energy will be and can better compare other sources.  Giving them long term viability.

Second, if and as other sources of oil open up they may be able to undercut that price.  Deep reserves, new fields, oil shale.  Those resources would be tapped with a fixed price and the oil produced could undercut OPEC.

Third:  INCENTIVE TO CHEAT!  OPEC operates on a pro-rata production basis.  Each member has a quota they can produce.  The incentive for each nation is to inflate production just a little so they get more than their fair share.  Of course, as they increase production the price drops.

With a fixed price, increased production would also drop the price.  But it would likely be covert at first by "discount" packages.  However, the system would soon simply fall apart as the black market took it over and the discounts, dual trades, and other became the norm.  

This would happen particularly quickly in the current environment as nations enjoyed super high oil revenue for a good long while and were addicted to it.  They need the money.  In that environment it takes amazing discipline to proper fix prices... and I don't think they can do it.

Essentially, no.  OPEC couldn't fix the price effectively and Chavez certainly can not.

Oil Production:
#1) Saudi Arabia: 10.2 BBL
#2) Mother Russia: 9.9 BBL
#3) USA: 7.5 BBL
#4) Iran: 4 BBL
. . .
#10) Venezuela: 2.7 BBL

Tons of reserves, unable to exploit them.