TALK IS CHEAP

[August1991]

I have already twice posted links to articles discussing the memo's leaked from various oil companies concerning both the collusion and price fixing.

Oil values are largely illogical, they are based upon the same principles as most current markets which are based on emotional runs. I don't see what this has to do with gas prices however or the point of this discussion which was oil company profits.

So, what is it Yaro? Are oil prices fixed by companies colluding in a cartel or are oil values largely illogical, based on emotional runs?

[err]

Yaro, I edited my previous post to ad more info on Venezuela, but was too late for you.  Here's the new part.

And as far as Venezuela goes, here's a review of the last 15 years or so:

'89  -  Food riots and looting see 100's dead

'92  -  Military officers stage 2 coup attempts

'93  -  Congress impeaches the president

'94  -  Half the banking sector collapses with falling oil prices, foreign debt and inflation

'99  -  Enter Chavez.  He creates a 'constitutional assembly' made up of his allies.  He replaces

              the democratically elected congress with this.(dictator?)

He was ELECTED... I know it might sound better to lie and call him a dictator, but he is and has been, ever since first elected a people's chamion.

'00  -  Chavez calls in troops to quell protests over his re-election

'01  -  Business and labor groups strike

'02  -  Workers reduce oil production, mass demonstrations force Chavez from power for 2 days

      -  General strike brings economy to halt.  Chavez silences independant media at this time

The "strike" was portrayed by the neo-cons as being as you described. In actuality, the wealthier Venezuelans didn't like the fact that Chavez was a champion of the poor. He was attmepting to truly nationalize their "nationalized" oil company (PDVSA), so that the revenue from the nation's oil went into the country's coffers (so everyone benefited), instead of to a handful of corrupt elite. The PDVSA thought they could make the citizens revolt on Chavez by crippling the country's finances... but it didn't work... Chavez won, and truly nationalized the oil, so the revenue benefits all Venezuelans, not just the elite.

'03  -  a petition with 3.2 mil. signatures is delivered to government wanting a recall on Chavez

      -  Chavez delays the referendum for a year, wins with 58%

          http://www.infoplease.com/ipa/A0108140.html

Chavez is a champion of the poor, which is the majority of the population of the country. Chavez held a referendum, on re-writing the constitution of the country... and received 70 percent support. The new constitution provided strong protections for women's equality, rights for indigenous people, and a ban on the privatization of the nations oil.

When I say Venezuela is unstable, you may not agree, but I think history does.

The USA and other Big Oil companies would like that to be the case.

On April 11, 2002, an armed faction took over the presidential palace in Caracas and took Chavez prisoner. When the public caught wind of this, they took to the streets. The coup had the support of the Bush administration. According to Chavez, "Washington applauded. The American ambassador (Charles Shapiro) came here to the palace and supported the coup". Only the next day, after Latin American leaders strongly condemned the coup, did US secretary of State, Colin Powell come out against it as well.

[sharkman]

Err, if we consider history, many dictators were originally elected, just like Chavez. And like Chavez, they consolidated power. Disbanding the democratically elected congress and replacing it with a body he creates, filled with his buddies gives him the power to do whatever he wants. Consider if Bush did that instead of working with the congress. Would you call Bush a dictator then? Chavez has also silenced media critical of him. They don't have a free press down there. That's scary.

But if you want to look over the last 15 years of Venezuela and call it stable that's your business. However, just looking at all of the events of the last 15 years or so it is easy for many to say it's unstable, without even considering Chavez's actions.

[tml12]

Err, if we consider history, many dictators were originally elected, just like Chavez.  And like Chavez, they consolidated power.  Disbanding the democratically elected congress and replacing it with a body he creates, filled with his buddies gives him the power to do whatever he wants.  Consider if Bush did that instead of working with the congress.  Would you call Bush a dictator then?  Chavez has also silenced media critical of him.  They don't have a free press down there.  That's scary.

But if you want to look over the last 15 years of Venezuela and call it stable that's your business.  However, just looking at all of the events of the last 15 years or so it is easy for many to say it's unstable, without even considering Chavez's actions.

<{POST_SNAPBACK}>

Dictators and extremists, whether right ot left or democratically elected or not, are just plain bad and harmful to democracy.

[sharkman]

I can agree with that, and Chavez is both.

[err]

You can regurgitate the false propeganda, or you can try to learn what is really going on. I have provided an exerpt that might help.

QUOTE(Why Venezuela has Voted Again for Their 'Negro e Indio' President

by Greg Palast )

So why, with a huge majority of the electorate behind him, twice in elections and today in a referendum, is Hugo Chavez in hot water with our democracy-promoting White House?

Maybe it's the oil. Lots of it. Chavez sits atop a reserve of crude that rivals Iraq's. And it's not his presidency of Venezuela that drives the White House bananas, it was his presidency of the Organization of Petroleum Exporting Countries, OPEC. While in control of the OPEC secretariat, Chavez cut a deal with our maximum leader of the time, Bill Clinton, on the price of oil. It was a 'Goldilocks' plan. The price would not be too low, not too high; just right, kept between $20 and $30 a barrel.

But Dick Cheney does not like Clinton nor Chavez nor their band. To him, the oil industry's (and Saudi Arabia's) freedom to set oil prices is as sacred as freedom of speech is to the ACLU. I got this info, by the way, from three top oil industry lobbyists.

Why should Chavez worry about what Dick thinks? Because, said one of the oil men, the Veep in his bunker, not the pretzel-chewer (Bill Clinton) in the White House, "runs energy policy in the United States."

And what seems to have gotten our Veep's knickers in a twist is not the price of oil, but who keeps the loot from the current band-busting spurt in prices. Chavez had his Congress pass another oil law, the "Law of Hydrocarbons," which changes the split. Right now, the oil majors - like PhillipsConoco - keep 84% of the proceeds of the sale of Venezuela oil; the nation gets only 16%.

Chavez wanted to double his Treasury's take to 30%. And for good reason. Landless, hungry peasants have, over decades, drifted into Caracas and other cities, building million-person ghettos of cardboard shacks and open sewers. Chavez promised to do something about that.

And he did. "Chavez gives them bread and bricks," one Venezuelan TV reporter told me. ......

But to feed and house the darker folk in those bread and brick lines, Chavez would need funds, and the 16% slice of the oil pie wouldn't do it. So the President of Venezuela demanded 30%, leaving Big Oil only 70%. Suddenly, Bill Clinton's ally in Caracas became Mr. Cheney's -- and therefore, Mr. Bush's -- enemy.

So began the Bush-Cheney campaign to "Floridate" the will of the Venezuela electorate. It didn't matter that Chavez had twice won election. Winning most of the votes, said a White House spokesman, did not make Chavez' government "legitimate." Hmmm. Secret contracts were awarded by our Homeland Security spooks to steal official Venezuela voter lists. Cash passed discreetly from the US taxpayer, via the so-called 'Endowment for Democracy,' to the Chavez-haters running today's "recall" election.

A brilliant campaign of placing stories about Chavez' supposed unpopularity and "dictatorial" manner seized US news and op-ed pages, ranging from the San Francisco Chronicle to the New York Times.

But some facts just can't be smothered in propaganda ink. While George Bush can appoint the government of Iraq and call it "sovereign," the government of Venezuela is appointed by its people. And the fact is that most people in this slum-choked land don't drive Jaguars or have their hair tinted in Miami. Most look in the mirror and see someone "negro e indio," as dark as their President Hugo.

The article can be found here:

Why Venezuela has Voted Again for Their 'Negro e Indio' President

[sharkman]

Perhaps the U.S. administration has been waging a PR campaign against Chavez. I'm not, nor have I tried to defend their actions. All I am saying is that Venezuela is unstable. This hurts their oil industry and sometimes production. I guess we will have to agree to disagree.

[err]

Perhaps the U.S. administration has been waging a PR campaign against Chavez.  I'm not, nor have I tried to defend their actions.  All I am saying is that Venezuela is unstable.  This hurts their oil industry and sometimes production.  I guess we will have to agree to disagree.

Since the USA already "participated" in a coup attempt, you can bet they're going to try to try again... maybe listening to Pat Robinson's advice and use a bullet ... They're known to do it....

[Toro]

Yaro, actually Venezuela has been unstable on a few fronts, one of them oil production.  Try googling "venezeula" and "oil" or "strike"  and see.  As well, here's a link regarding their shortfalls http://www.financialsense.com/editorials/d.../2005/0520.html

<{POST_SNAPBACK}>

Venezuela is producing about 2.6 million barrels of oil per day. However, they were producing 3.3 million a decade ago. Chavez still claims they are producing that much but oil analysts don't believe it. Little capital has gone into PDVSA and many technical professionals have left because Chavez has purged the company and replaced them with cronies.

[Toro]

This is rather facetious reasoning; there are two major factors that determine the retail price of goods, landed cost and market competition. Landed costs haven't changed at all, and competition is non-existent in this market.

This is false. Finding and development costs for American oil companies have risen from about $7 per barrel five years ago to $12 per barrel today. Oil companies are increasing F&D costs because with the price of crude trippling, companies are exploring more marginal projects.

Second, oil is a commodity. Competition is huge. The oil industry to not earn its cost of capital from 1982 to 1997, then broke even from 1997-2001.

Wow were do I start; there is no shortage of oil right now. OPEC is at full production and there is raw oil aplenty. What is in short supply is refining capacity, refining capacity was shortened intentionally in order to drive give the big oil companies the ability to raise the price of gas without a rise in cost and the best part for big oil is that people are so uninformed on this topic (for some reason) that they blame it largely on lack of oil.

Refining capacity has not been taken out. What has happened is that there have been no new refiners in the US built over the past 25 years. However, many refiners have had upgrades, which adds incremental capacity. And refining has been an even worse business than exploration and production over the past 3 decades.

Costs for exploration are not mammoth, there actually fairly small. Your mistaken on the spending by Shell. There is a great deal of competition between big oil companies in finding new supply streams but there no chance they spent in the hundreds of billions and its far more likely it was in the hundreds of millions.

Here's the IEA's long-term forecast. They estimate that $17 trillion will have to be spent to increase oil production to necessary levels over the next 25 years. I would say that $17 trillion is not "small"

[tml12]

Perhaps the U.S. administration has been waging a PR campaign against Chavez.  I'm not, nor have I tried to defend their actions.  All I am saying is that Venezuela is unstable.  This hurts their oil industry and sometimes production.  I guess we will have to agree to disagree.

Since the USA already "participated" in a coup attempt, you can bet they're going to try to try again... maybe listening to Pat Robinson's advice and use a bullet ... They're known to do it....

<{POST_SNAPBACK}>

That would be the most ridiculous thing ever. The U.S. will not take out Chavez. They failed in Cuba, they will almost certainly not try to alienate anyone in South America.

The two countries U.S. intelligence are focusing most on now must be Iran and South Korea.

[Yaro]

Sorry it took so long for a reply...

So, what is it Yaro? Are oil prices fixed by companies colluding in a cartel or are oil values largely illogical, based on emotional runs?

Oil Prices are not gas prices, while they are linked is far from direct or absolute. As I said before the price of gas SHOULD have risen, however it should not have reached anywhere near the levels that it did. This shouldn't have been governed by the futures market it should have governed by the competitive nature which currently does not exist.

Yaro, I edited my previous post to ad more info on Venezuela, but was too late for you. Here's the new part.

And as far as Venezuela goes, here's a review of the last 15 years or so:

'89 - Food riots and looting see 100's dead

'92 - Military officers stage 2 coup attempts

'93 - Congress impeaches the president

'94 - Half the banking sector collapses with falling oil prices, foreign debt and inflation

'99 - Enter Chavez. He creates a 'constitutional assembly' made up of his allies. He replaces

the democratically elected congress with this.(dictator?)

'00 - Chavez calls in troops to quell protests over his re-election

'01 - Business and labor groups strike

'02 - Workers reduce oil production, mass demonstrations force Chavez from power for 2 days

- General strike brings economy to halt. Chavez silences independant media at this time

'03 - a petition with 3.2 mil. signatures is delivered to government wanting a recall on Chavez

- Chavez delays the referendum for a year, wins with 58%

http://www.infoplease.com/ipa/A0108140.html

When I say Venezuela is unstable, you may not agree, but I think history does.

First off let me say what a pleasure it is to meet someone who takes an interest in the world outside there borders. Venezuela is a fascinating place at a fascinating time, such a pure contrast of far right vs. far left.

Next let me first say that Chavez has OVERWELMING support in Venezuela, the only group of people of which this is not true is a very powerful aristocracy (maybe the most powerful in south America). The latest figures put his approval rating at north of 70%, in a country with an 80/20 economic split and a private media industry that is virtually complete opposed to him that is a truly extraordinary number. Chavez is viewed as nothing short of a national hero.

There is a great deal of untruth to many of the statements on both sides of the fence in Venezuela, and certainly Chavez is no angel as there are very credible reports that he has both blocked protests and some reports that he may have ordered police to fire on protesters to disperse crowds.

Chavez is a hard leftist, always has been and I certainly don't agree with many of the things he has done. However what is undeniable is that what he has done has been good for the average citizen of his country, this despite the massive opposition from the corporate sector oil and media interests.

I think that any valuable discussion should be prefaced by a little bit of background on Venezuelan politics. First let’s define our major players, there is of course Chavez and his cabal which consists of a significant portion of the military (he is ex military) and a congress that is almost in its entirety his (he threw out the democratically elected congress and replaced it with his cronies in order to push through a new constitution).

Then there are the Oil interests, there are too many to start listing individuals here but let’s just look at the general milieu of what they comprise. The oil pumped out of Venezuela before Chavez was pumped under a rather sweetheart deal that was negotiated by Clinton,

As an addendum to the Oil interest lobby it should be pointed out that there is no significant labour movement in Venezuela, this really isn't surprising considering the poverty that has been the norm in that country for most of its existence. Any time you hear "labour" its best just to take it as the corporate front that it is. All of the senior positions within the labour movement also hold high positions within the oil industry and most of the workers themselves are poorly educated and poorly paid, far to poorly to organize in any meaningful way.

Then there is the third party, the most interesting group imo because it shows just how powerful an influence a directed media can be. The largest and most powerful media group in Venezuela is the Cisneros Group, not only is it one of the largest in Venezuela its one of the largest in the world. It’s run by the man considered by most to be the second most powerful man in the country, Gustavo Cisneros. There is also Andrews Mata owner of the second largest media group in the country El Universal, a close personal friend of Cisneros. Gustavo Cisneros is the most important player to the far right by some distance however.

Although there are major players really those are the main ones for a number of reasons. The military is to split among the factions to be considered a cohesive group, and has preformed heinous actions on each of there behalf at least one time within the last decade.

Let me point out a few things about your list.

'00 - Chavez calls in troops to quell protests over his re-election

troops were called in by Chavez to combat brood squads that had been hired by the oil companies, this was an incredibly dark day in Venezuelan history. If you don't know what a brood squad is, it’s a group of people hired by a company (in this case a broad coalition of companies) to quell massive unrest among a workforce. They are a pretty prominent and reoccurring theme in history and this was just a Venezuelan occurrence. Calling it quelling protests is wholly inaccurate.

'01 - Business and labor groups strike

Business groups locked out there workers gathered groups of engineers and managers formed "unions" and went on strike trying to damage the economy enough to get Chavez to bargain.

'02 - Workers reduce oil production, mass demonstrations force Chavez from power for 2 days

Completely untrue, this was an attempt by the oil and media industries to force Chavez from office using a completely trumped up set of circumstances and maybe the most singularly focused attack by media in a country ever. I am not even sure where they are getting some of this information from as it’s utterly ridiculous.

Many many things are afoot in Venezuela currently, but none of them are signs of an unstable government or country. The economy is growing despite the strikes and the only people being hurt are the oil executives who have been using the stoppages in order to try to leverage Chavez. However this may have backfired because Chavez recently launched accusations of tax/royalty evasion at several oil companies in Venezuela which may drive them into bankruptcy (several have already gone bankrupt because of the strikes they induced themselves). This may very well play right into Chavez's hands as its always been obvious that he wants direct control of the oil and he may very well wind up with it if he can seize control of these companies assets for the trumped up tax/royalty evasion charges.

Then there is the emergence of the state run media which trades blows daily with the corporate media. Really there is too much to cover in one post on the subject but I would enjoy a discussion on any specific topic concerning Venezuela.

Maybe, but that wouldn't work out too well for the people who make a living selling gas in Canada, would it?

Bottom line, this is supposed to be a free market, and people are supposed to be able to sell their product at whatever they deem an appropriate price. If people keep buying, why shouldn't they raise their prices?

Sure, if you concede that it is a monopoly because only monopolies work the way you are suggesting.

Fuel efficient vehicles are not the exclusive domain of the wealthy-- traditionally it's been the opposite, in fact (the rich drive SUVs, luxury sedans, and sports-cars while the poor drive sub-compacts.) Car companies in fact have subsidized the cost of compact cars at the expense of large vehicles so that they can sell enough compacts to maintain a sufficiently low corporate average fuel economy (CAFE) number.

I'm sure that if you scan the used car listings, you'll find that the trend continues: many of the cheapest cars will be small, fuel efficient cars. (RB's Swift, for instance. )

You’re ignoring a monopoly on the grounds of a secondary effect that you find desirable. While I won't argue against society moving to more fuel efficient cars this is not the right mechanism for that. Principled changes should come from government not corporate malchavianisms.

Err, if we consider history, many dictators were originally elected, just like Chavez. And like Chavez, they consolidated power. Disbanding the democratically elected congress and replacing it with a body he creates, filled with his buddies gives him the power to do whatever he wants. Consider if Bush did that instead of working with the congress. Would you call Bush a dictator then? Chavez has also silenced media critical of him. They don't have a free press down there. That's scary.

But if you want to look over the last 15 years of Venezuela and call it stable that's your business. However, just looking at all of the events of the last 15 years or so it is easy for many to say it's unstable, without even considering Chavez's actions.

Untrue, the media in Venezuela is VERY free and extremely powerful. They have media interests all over the world and would literally be impossible to silence. During the last coup they instigated for several days leading up to it with radio adds every 10 minutes.

I can agree with that, and Chavez is both.

Chavez is a left wing hardliner, he is not by any reasonable definition of the word a dictator, dictators do not have 70% support and do not disband the government and go into an election because of a petition.

This is false. Finding and development costs for American oil companies have risen from about $7 per barrel five years ago to $12 per barrel today. Oil companies are increasing F&D costs because with the price of crude tripling, companies are exploring more marginal projects.

Development costs are another name for infrastructure costs, they are not the costs associated with finding new oil they are associated with developing the infrastructure to exploit that oil. The statement is true, just not saying what you think its saying.

Second, oil is a commodity. Competition is huge. The oil industry to not earn its cost of capital from 1982 to 1997, then broke even from 1997-2001.

This is just plain misleading. Oil Companies throughout this entire period were busy establishing oil projects all over the world (not that’s oil recovery projects) and invested huge sums in infrastructure to in order to insure future oil supply. I never even argued this point however and it is irrelevant, what the oil industry did was ensure that it was not there supply of crude that was threatened and there is indeed a great deal of competition in the search for new sources of crude while simultaneously ensure that there would be a shortage of refined gas. They did this by closing refineries, they did this in concert to drive up gas prices.

Why would they not fight for crude supply? It’s to each companies benefit to do so, and why would they not collude on gas prices when it is again in there interest to do so?

People seem to be confusing two different aspects of the same business. Crude and refined oil are two separate commodities, and while they are linked they are separated by the refining process. It serves well the interests of the oil companies for there to be a large supply of oil (and so they fight viciously and do there best to create such a supply) and it is simultaneously in there interest for there to be a shortage of refined oil and so they do again whets in there best interest to create that.

Refining capacity has not been taken out. What has happened is that there have been no new refiners in the US built over the past 25 years. However, many refiners have had upgrades, which adds incremental capacity. And refining has been an even worse business than exploration and production over the past 3 decades.

untrue, even if you take the estimated 20% of total price pump for refining cost it is a very lucrative business. Several refineries were shut down in the early 90's at the same time others were upgraded, the overall capacity to refine in the US has fallen however.

Here's the IEA's long-term forecast. They estimate that $17 trillion will have to be spent to increase oil production to necessary levels over the next 25 years. I would say that $17 trillion is not "small"

Once again, this is includes infrastructure costs and in no reasonable way could be held under the title of exploration which was the topic we were discussing. There is little doubt that worldwide infrastructure costs in the coming decades will be enormous however the vast majority of that will come from governments not companies.

That would be the most ridiculous thing ever. The U.S. will not take out Chavez. They failed in Cuba, they will almost certainly not try to alienate anyone in South America.

The two countries U.S. intelligence are focusing most on now must be Iran and South Korea.

Yes and no, Venezuela is a very important exporter of oil to the US, and while the recent agreement with China goes a long way to freeing Venezuela from its dependency on the US it certainly remains a two way street. If Chavez is successful in getting the totality of the oil industry under his control and continues to hold such widely held popularity? There are several other countries in the reason that have "Chavez's" of there own (or at least self described Chavez's) attempted to do the same thing in there own countries (allegedly). Take for instance the Chevron-Texaco operations in Columbia which are wildly unpopular, if a Chavez were to arise there and kick out CT? The ripple effect could be enormous. Also considering the US's history in the region and the brand new DOD's ID hungry for some action... But I think it unlikely because Chavez screams about it so much that if he actually gets assassinated the US is automatically blamed for it and that could create an even worse situation.

[err]

Perhaps the U.S. administration has been waging a PR campaign against Chavez.  I'm not, nor have I tried to defend their actions.  All I am saying is that Venezuela is unstable.  This hurts their oil industry and sometimes production.  I guess we will have to agree to disagree.

Since the USA already "participated" in a coup attempt, you can bet they're going to try to try again... maybe listening to Pat Robinson's advice and use a bullet ... They're known to do it....

<{POST_SNAPBACK}>

That would be the most ridiculous thing ever. The U.S. will not take out Chavez. They failed in Cuba, they will almost certainly not try to alienate anyone in South America.

The two countries U.S. intelligence are focusing most on now must be Iran and South Korea.

The most ridiculous thing ever... when they participated in a coup to take Chavez out 3 years ago.... doesn't sound ridiculous at all ... especially that Chavez is the biggest obstacle to the USA's big FTAA project....