Under the radar. This is not good and as always we consumers pay at the pump as the big corpsgov play.
Exxon Mobil has gone after the assets of state oil company Petroleos de Venezuela SA in U.S., British and Dutch courts as it challenges the nationalization of a multibillion dollar oil project by Chavez’s government.
A British court has issued an injunction “freezing” as much as $12 billion in assets.”
If you end up freezing (Venezuelan assets) and it harms us, we’re going to harm you,” Chavez said during his weekly radio and television program, “Hello, President.” “Do you know how? We aren’t going to send oil to the United States. Take note, Mr. Bush, Mr. Danger.”[.]
Reuters has more:
Oil firms watchful as Exxon fights nationalization
NEW YORK (Reuters) – Oil majors under pressure from a wave of resource nationalism worldwide are likely to remain on the sidelines of Exxon Mobil Corp’s legal fight with Venezuela before launching into a similar battle.
The biggest U.S. company won court orders to freeze up to $12 billion of the OPEC nation’s oil assets around the globe as it fights for compensation for a project lost in President Hugo Chavez’s nationalization drive.
“I think the simple answer is, other companies are going to watch and wait and see if this approach of Exxon’s is effective,” said Mike Wittner, analyst with Societe Generale in London.Countries with large hydrocarbon reserves from Bolivia to Ecuador to Russia have been adjusting terms along with the surge in oil prices, which jumped from $10 a barrel in 1999 to a record $100 a barrel in January.
With fierce competition for limited global oil reserves, many companies operating in Venezuela have been more amenable to the changes in project terms.
Exxon, which had a smaller percentage of worldwide production in Venezuela than other majors such as ConocoPhillips (COP.N: Quote, Profile, Research), is renowned for fighting claims against it, such as the lawsuit following the 1989 Exxon Valdez spill in Alaska. [.]
We may see rations if Chavez makes good his threat. Yes he has made these threats before but Exxon’s move may trigger a calamity.
There’s no excess capacity to make up for any shortfall in supplies.
Feb. 11 (Bloomberg) — Crude oil rose for a third day in New York after jumping more than $3 a barrel on Feb. 8 on forecasts of reduced output from the North Sea and Nigeria.
does not factor in the Venezuela threat.
and just to clarify the significance of that prospect check this handy chart out: crude oil imports, from the energy information administration.
venezuela is the 4th largest source of imported oil.
this would be a big hurt.
chavez has got BushCo™, and consequently us, by the short hairs…as they say.
happy motoring as we speed towards recession or worse.
lTMF’sA
Unlike Chevron and French Total, Exxon chose not to negotiate. Exxon needs reconsider their confrontational approach. The bully approach is not a charm.
As soon as the weather breaks from -22 F. degree weather, I’m investing in a scooter.
The neocons would of course consider this an act of war. It would be like Saudi Arabia cutting us off, over a million barrels of oil a day, poof. Oil would hit $150 a barrel or so almost overnight.
Come to think of it, if you’re Bush, where’s the downside to Chavez actually doing this? Oil companies would make even larger profits, Bush would get to rally the country around yet another external enemy, and he’d get to scare the crap out of the sheeple again.
Hell, he’s probably praying Chavez does this.
the market rises and falls on rumors… oil is up $3 since Feb 08 on forecasts of reduced production in Nigeria and North Sea.
there’s a downside should Chavez move to cut… sure oil would jump $150/bbl overnight but U.S. economy will grind to a halt on rations. Price does not matter if there’s no supply. The Gulf States can’t help out…they’re maaxxed.
This is true, but then again “the little people are going to suffer” hasn’t bothered Bush before.
The economy is going to be bad whatever Bush does. Yes, that would speed up our decline. Frankly, Chavez would look like a hero, Bush would get to throw his weight around, and he’ll start blaming Chavez for our economic problems. Besides, what’s Congress going to do about it?
If you’re Bush, you want Chavez to follow through on this.
1953 – CIA overthrows Iran’s leader after he moved to nationalize oil
1954 – CIA overthrows Guatemalan leader after he moved to nationalize resources.
1957 – CIA tries to assassinate Sukarno after he moves to nationalize resources.
1959 – CIA tries to assassinate Castro after he nationalizes nickel mines, sugar fields, casinos, and other assets.
1961 – CIA aided the assassination of Trujillo, who already owned most of his country’s assets and who appeared to be fomenting a Communist (nationalist) revolution in Latin America. (The CIA sent the guns used to kill Trujillo to the shooters via diplomatic pouch, per the Church Committee hearings.)
1963 – President Kennedy was assassinated just as he was a) trying to end the war in Vietnam and b) trying to institute government to government loans to aid the Latin American countries so they wouldn’t be forced to subject themselves to the private bankers.
1964 – CIA aided the assassination of Lumumba in the Congo (one CIA officer claimed he drove Lumumba’s dead body around in his trunk, trying to figure out what to do with the body) just as Lumumba was trying to nationalize the lucrative mineral industry in the Congo.
This pattern repeats ad nauseum over the years. There’s no doubt in my mind, or, for that matter, in Alan Greenspan’s mind, that the war in Iraq was all about preserving access to oil and related issues.
So yes. Chavez must surely know he is not on firm footing. The CIA already tried, but failed, to overthrow him in a Bush-backed coup attempt.
Is he a brave man? Or an arrogant man? Or a bit of both? I hope, for his country’s sake, such a coup doesn’t happen. Not from the outside, in any case. If his own people want to remove him, they’re going to have to do that themselves. But we can’t throw him out. Look what happened in all those other places. Where we struck, brutal dictatorships replaced each democratic or even marginally democratic regime. We dare not try that again. We’re already seeing the results of past efforts.
Different era.
I notice a scant few years ago, Bush and Blair stood aside as Russia nationalized its oil resources- abrogated contractual arrangements with British and American companies.
quite a bit bigger (and harder to bully) than the other targets she listed?
The nuclear arsenal stands out in my mind as a signal difference between Russia and Venezuela. Russia’s trump card is the end of the world; Venezuela’s trump card is a major inconvenience. Ergo, there are hard limits to how much you can fuck with the Russians, but how much you can fuck with the Venezuelans is just a matter of your comfort level.
And by “your”, I mean the oil barons that run the US, not proles like us. Our discomfort is not an issue.
good, maybe we’ll get better public transportation in my metropolitan city..like an express bus..
The U.S. is screwed:
1.Global Crude Supply: Is the Oil Peak Near?
2.Oil Cartel under pressure to switch to euro pricing.
maybe it will speed up this process..
http://www.treehugger.com/files/2008/01/gm_banks_on_coskata.php
I think this is posturing. From what I understand about the oil market, this is an impossibility.
Soj wrote an article about how the oil market works, but I can’t find it now. I found this entry, A Story About Oil You Need To Hear that touches on it.
Basically, the problem with Chavez’s threat is that countries don’t sell oil directly other countries (meaning also that countries don’t buy oil directly from other countries). Instead, it is sold and bought through an exchange. So we don’t really “know” where any of the oil we buy comes from. Incidentally, this is why the U.S. can’t just up and decide to stop buying oil from middle eastern countries.
So, Chavez could stop selling Venezuelan oil altogether, which would have the effect of pushing oil prices much higher due to the reduced supply, but would also cripple the Venezuelan economy.
posturing yes. But the rhetoric affects the price of oil near term. Concern over supply disruptions puts in a floor. I admit oil traders will grab any excuse to raise the bid and we do pay at the pump. Reuters current headline:
Oil surges to one-month high near $94
That’s kind of what I was thinking. I suspect the logistics are a little more complicated than that, but what Chavez actually can do is cut output in general. That would affect oil prices globally and subject him to immense pressure from pretty much everywhere.
OTOH, if Exxon’s actions are seriously crimping his government’s cash flow, he might consider it worth the cost.
not to be overlooked
Cost of production. Current price.
Oil has gone from $10 in 1999 to $90. All any producer country need do is reduce volume of sales and still be ahead.
Venezuela ships refined products to the U.S. including gasoline. Due to lack of refining capacity, the U.S. has to resort to imports. Also, Venezuela owns CITGO stations. Ever wonder why CITGO stations generally have lower prices and if not for Exxon, Shell, Gulf, the prices could be lower?
CW holds there are no other markets for for Venezuela’s oil? Wouldn’t bet on it.
Venezuela’s oil may move through a market or not, but the tankers go directly from his shores to ours. He knows where they are going. He knows how to stop them. Is the ‘market’ going to stop him? It’s far from a practical impossibility, and frankly it has been done before, but by Venezuela’s right wing and foreign oil companies.
I’d rate this ‘Excellent’ if I knew how to do it.
want to know where the oil exporting countries think the future is?
it would appear that they’re a bit ahead of the curve:
of course, they can afford it…unlike the worlds biggest economy.
lTMF’sA