Editor's Mail

----- Original Message -----
From: Diego Gonzalez
To: EnergiaVenezuela@yahoogroups.com
Sent: Monday, May 01, 2006 12:45 PM
Subject: Sobre la producción de petróleo de Venezuela

Chavista mismanagement (and thieving) has left Venezuela with a $2 billion oil shortfall on its contracts. The country literally DOES NOT HAVE ENOUGH OIL to supply all the nations it’s signed contracts with to supply. Therefore, it’s buying $2 billion in oil from Russia to avoid penalties, not the least of which is its claim to be an important oil superpower.

It’s nothing to be surprised about, given that socialism ALWAYS produces shortages. That’s been a lesson to the world for about 80 years. The example this travesty parallels most closely is from 30 years ago, when the Soviet Union, which had been a breadbasket under the Russian czars, was driven by shortages to purchase U.S. wheat. Communism produces the same result no matter how many ways you try it. And insanity is doing the same thing over and over and expecting a different result. That brings us back to Hugo Chavez.

I know dense people who still believe that oil production has not fallen in Venezuela. They claim it has too much oil and oil companies investing there will pay any price to get it. As noble Exxon Mobil has shown, they will not. There are limits to how much rubbish they can take from dictators because they must answer to shareholders and cannot show losses. Unlike Chavez, they are accountable.

Oil to Chavez is not an important resource with potential for creating value, to be treated with attentiveness through the cycles of investment, production and maintenance. Instead, oil, to him, is something that comes out of the ground on his command. It’s a bottomless commodity whose chief purpose is his own aggrandisement.

That’s led to many harsh measures on the producers of oil, whom he dubs “robbers.” He’s killed incentive to produce by firing the state oil company’s talented staff, by breaking contracts with western oil companies who invest there - forcing them into joint ventures which are nothing more than workers’ collectives. He’s rendered the state oil company intransparent, closing all of its books to the public and creating a petri dish for corruption.

That’s been killing oil production to the point of oil shortages in the oil giant. Oil production is down 60% from the pre-Chavez days. Sixty stinking percent! Venezuela is the only OPEC member besides Indonesia that is now producing below quota, what should be a sign to everyohe that Chavez’s rape-and-pillage philosophy toward Venezuela’s oil resources is literally destroying its productive capacity.

If Chavez would stop giving his nation’s oil away like cheap party favors, as he does for Fidel Castro’s no-pay dictatorship in Cuba, his country could probably produce enough oil for its customers in the short term.

Now Venezuela has run out of oil and must pay $2 billion to buy it abroad. Will there be any accountability for this squandering of the national treasure? Of course not. The ballot boxes are rigged. But the rest of the world can look on in scorn as another figurative breadbasket endures its period of starvation under communism. We’ve seen this movie before.

Andy Webb-Vidal at the Financial Times has the story here.

 

Petroleumworld 05 02 06

 

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