Saturday, April 08, 2006


Monty Hall on Developments in Venezuela

People ask me what news sources I trust. Answer: none. The US media has ceased being a joke and has become a means by which you can know less than if you ignored them entirely. But even the independent media make mistakes and have their biases. The only way to get the right story is to piece it together on your own. It's a lot of work, and I'd rather pay someone else to do it. If you actually need to know what the future is likely to bring for, say, purposes of investment, though, there's no way to avoid the work. Today, the BBC is reporting that "The US has accused city officials of the Venezuelan capital, Caracas, of complicity in an attack on the car of US Ambassador William Brownfield" while he was delivering free baseball equipment as a goodwill gift to the poor. Basically, he got egged and the cops didn't react fast enough for the ambassador's liking. There is absolutely no evidence given that this was organized by any Venezuelan official. Now, if you're a Bushevik, you take this story at face value: Crazy Hugo attacked the American ambassador; assassination is (according to Pat Robertson) the Christian thing to do. If you have any residual capacity for thought, you take this story as a starting point and start working toward figuring out what's going on. Here are some basic facts: 1. The US attempted to remove Chavez by coup several years ago, of which our "democratic" media approve. He subsequently overwhelmingly defeated a recall effort by the oligarchy in an election supervised by international monitors, including Jimmy Carter. 2. Venezuela is in the midst of an economic boom. Unlike the US, where none of the income growth for a quarter century has been shared with the poorest third of the population, Venezuela's poor are actually doing pretty well. Chavez is enjoying a popularity rating similar to that of Dubya immediately after 9/11. 3. Venezuela has oil reserves valued at $5 Trillion and the largest natural gas reserves in Latin America. Prior to Chavez, it got pennies on the dollar. Renegotiation of the royalty agreements has led to conflict with oil companies, e.g., a shutdown of production at Exxon's La Ceiba. The current government has alleged that there was dishonest accounting and tax evasion. Around the time of the coup, there was massive sabotage against oil production. 4. One author estimates that from the year before Chavez took over through 2005, oil revenues went from $4.3 B/year to $25.5B, a factor of 6. Even given the general rise in the price of oil, this is pretty good performance by Chavez, considering how much the US press bad mouths him. Still, this amounts to about $1-$2/day per person. 4. Venezuela is suffering a bizarre crime wave. . While apparently it historically has a very high crime rate, the recent crimes have included very high profile crimes (e.g., kidnappings, bank robberies) of the kind that I think are probably not typical. Usually in good economic times, crime rates go down. So, one has to wonder whether this is not a destabilization effort from outside. In summary, Venezuela is a country with major oil reserves which still do not make it wealthy. The current leader is wildly popular in Venezuela because he has distributed some of the oil wealth to the poor (also increasingly popular in the US for giving oil at low cost to our poor). He is wildly unpopular in right-wing American elites for exactly these reasons, to the point they have committed acts of violence, sabotage, and ... well, lied their buttocks into the next county. On this particular case, we don't have enough facts to know which of three possible explanations is correct: 1. A spontaneous expression of anti-Americanism and police sympathy toward that anti-Americanism 2. A plot by Venezuelan officials, either the mayor or the president, to embarass the American ambassador 3. An element in a larger plot by American officials to destabilize Venezuela So, even though we don't really know for sure, once one understands the context, I'd choose door number 3 as the best guess. The truth will come out in the end, and--whether I'm right or wrong today-- we'll blog it here. ____ And for those who patiently waded through this long post, I'll share some useful links I stumbled across: Alternative Energy and Oil Voice.
In addition to its conventional oil reserves, Venezuela is also sitting on rock-bound oil reserves that dwarf those of Saudi Arabia at its height. It's estimated that at current rates of consumption, there's enough there to fuel the world for the next hundred years. (Of course, the rate of consumption keeps growing, but it's still probably enough realistically for at least the next forty to fifty years. By which time even the US will have transitioned over to other energy sources.)

These reserves haven't been tapped until now because it's not economically feasible to do so unless oil prices stay above $45 a barrel. Well, since oil prices will never be that cheap again (they're currently at over $60 a barrel, with occasional flirtings with $70 a barrel), Chavez is in business big-time, especially with the Chinese.
Long before this, oil will very likely have ceased to be feasible to use as an energy source for environmental reasons. Bush and his cronies covet what is likely to turn from black gold into fool's gold overnight.
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