Venezuela: Interventions 'r' US
Posted: Monday, December 30, 2002
by Dale Allen Pfeiffer, FTW Contributing Editor for Energy
[Ed. Note: Remember the cardinal rule: Since the Second World War oil prices spikes have invariably led to recession. Recessions are a way of curbing demand for oil. Unemployed people buy less gasoline. And recessions never hurt the rich; only the middle classes and the poor. - MCR]
Who is the United States' number one opponent in its quest for imperialism? Forget about Osama Bin Laden, George Dubya certainly has. And don't fret about Saddam Hussein, he is simply an excuse for intervention. Never mind looking down the road to see when Russia or China will step into the fray. Our no. 1 opposition is a business cartel with the power to strangle the U.S. economically. As global oil production begins to decline, OPEC could become the most powerful organization on the planet, providing that George Dubya Bush does not smash it first.
Taking over Iraq and placing the Saudi oil fields under U.S. protection would break OPEC and establish the U.S. as the premier energy broker in the declining days of oil. And the Bush Administration has been very eager to do just this, though it is attempting to keep the international community appeased while making this power play. Now, however, the Iraq invasion is likely to be delayed until we have reined in another OPEC member much closer to home.
The oil industry in Venezuela has been idled by its upper management, as part of a supposed general strike intended to topple the Chavez government. This is a strike of the rich, and the vast majority of Venezuelans are not supporting it. The strike is a failure in every other respect but for the critical shutting down of oil exports. In this crucial industry, which provides most of Venezuela's wealth, the lockout has cut oil exports to a trickle.
Venezuela is the fifth biggest oil producer in the world, and is the third largest supplier to the U.S., exporting oil to this country at the rate of 1.5 million bpd. Venezuela's oil production has dropped from just under 3 million bpd to barely more than 825,000 bpd. Little more than one month ago Venezuela was supplying one out of every ten barrels of oil that the U.S. consumed. Now the country is having troubles just meeting its own oil demands. In fact, Venezuela has resorted to the short term importation of refined gasoline to keep its economy moving.
Venezuelan President Hugo Chavez has called for the military to intervene in the oil lock out, echoing President Reagan's actions in the air traffic controllers' strike. And the military has acted to take control of a few of the idled tankers. But production and shipping are still down to a trickle of what they once were. The Supreme Court issued a temporary ruling ordering the striking employees back to work, but production remains stifled as oil executives continue their defiance.
President Chavez will have to end this strike soon and bring production back to normal levels, and do so without giving the U.S. cause to intervene. The longer this strike goes on, the longer it will take to get production back in order once the strike has ended.
The Venezuelan strike has already sent up oil prices. In the U.S., oil has already gone to over $32 per barrel, with prices rising at the pump as a result. If the strike continues, oil prices will continue to climb.
Look for the price climb to be led by Citgo Petroleum Corporation, which is owned by a subsidiary of Venezuelan PDVSA. Citgo is buying crude on the open market, but their refineries are geared for the heavy Venezuelan crude, and their production is being affected by the strike. Many other Gulf Coast refiners are also feeling the loss.
Already faced with possible natural gas price spikes if this is a cold winter, we are also going to see the price of gasoline rise. Either one could be fatal for our ailing economy.
While Dubya doesn't seem too concerned about the U.S. economy, the oil strike in Venezuela could upset his plans for Iraq. Former Venezuelan energy minister Calderon Berti said that if both the Venezuelan and Iraqi oil supplies were cut off, oil prices would soar to over $40 per barrel. Before Dubya can attack Iraq, he needs to secure the Venezuelan oil supply.
For this reason, the U.S. may sponsor a coup in Venezuela within the next month or so. And this is what the strikers want. Their goal is to disrupt Venezuela's economy until the military has to intervene against President Chavez. This strike was choreographed by experienced coup plotters in the U.S. The unions behind the strike, and the corporate media who have lied about it are financially tied to the National Endowment for Democracy, which is a cover for CIA financing.
Otto Reich of the State Department and Elliott Abrams of the National Security Council are overseeing the efforts to install a more compliant regime in Caracas. Both men are veterans of the contra war against Nicaragua. It is their plan to destabilize the country and then aid a military coup. They had hoped to pull off this coup months ago, but had not reckoned on Chavez's popularity with the vast majority of the population. Since then, they have been trying to erode that popularity while attempting to turn the military against Chavez.
Now that their plans have come to impede the invasion of Iraq and threaten the U.S. economy, Abrams and Reich will be urged to either bring their plans to fruition or allow somebody else to broker a settlement with Chavez. And there are other urgent deadlines in imposing a diplomatic junta on Venezuela. Jan. 1, Brazil will inaugurate Lula da Silva as president, and ten days later Ecuador will inaugurate Colonel Lucio GutiŽrrez. These men will provide a left-leaning block that could act in opposition to Washington's plans for the region. And perhaps most importantly, the Hydrogen Law will take effect on Jan. 1, giving Chavez the tools he needs to reform the state-owned oil industry. The Hydrogen Law is a piece of Venezuelan legislation which will socialize more of the profits of the oil business and keep them in Venezuela for the benefit of the Venezuelan people. This is perhaps the single most important issue for Chavez's opponents both at home and abroad.
For all of these reasons, for the U.S. economy, and for the invasion of Iraq, Washington is going to seek a quick resolution to the Venezuelan situation.
OPEC may actually step in to help lower oil prices, should the current situation go on for too long. To extract the maximum profit without putting too much stress upon the world economy, OPEC has a target range for oil prices of between $22 and $28 a barrel. Below that price, OPEC members lose their profits, and above that price, the market begins to dry up. Within OPEC there is an agreement to step up production if the price of oil stays above $28 per barrel for 20 consecutive days. Let us not forget, however, that while it only takes five days for a shipment of Venezuelan crude to reach the U.S., it takes five weeks for a shipment of Middle East crude to reach the U.S. Any relief from the Middle East will be delayed by over a month.
And there are those who wonder if OPEC has the spare capacity to cover Venezuela's 3 million bpd. Virtually all OPEC countries are currently pumping in excess of their quotas. However, the current oil production is barely enough to stabilize the market. This question of spare capacity will become increasingly important in the years ahead. The amount of oil in the ground does not matter if you are pumping as much as you possibly can through all of the wells in operation.
Beyond the question of production capacity, is it in OPEC's best interest to aid the U.S. in the military domination of OPEC member states? It must be obvious to members of the cartel that the U.S. seeks to undermine their power and take over control of the planets remaining hydrocarbon deposits.
How can OPEC stand aside and do nothing while the U.S. stages coups in Venezuela, prepares to invade Iraq, and vilifies Saudi Arabia while eyeing that country's oil deposits? Certainly, the economic weapon which OPEC wields is a two-edged sword, but if you are fighting a war, then you must expect to make sacrifices. However, before OPEC will become a fighting machine, it needs a leader who can bring all of the member nations to see that they are in fact at war with the United States. And that will be a tough chore.
Perhaps OPEC will wake up in time. But it is just possible that the U.S. could be in control of a major portion of the world's remaining oil supplies when OPEC finally does wake up.
If the U.S. can back a successful coup in Venezuela and take Iraq quickly, Washington will be in a very powerful position and will rule a global empire for some time to come. And this prospect seems quite imminent to those who are calling the shots in Washington.
On the other hand, if operations become bogged down in either Venezuela or Iraq, the result could very well be the ruination of U.S. dreams of global imperialism. In Venezuela, if Chavez retains the backing of a major segment of the population and the military, then we could see a bloody civil war, which could disrupt oil supplies for some time to come. The situation could become quite ugly if U.S. intervention led to collaboration between Pro-Chavez forces and Colombian rebels. We could easily find ourselves in a regional conflict that could make Vietnam look like a Sunday picnic.
Likewise, if Saddam Hussein prepares his nation for urban guerrilla fighting, then we could find ourselves fighting a war of attrition in the Middle East. In this case, the extended warfare in oil producing regions could precipitate a global economic meltdown, for which the U.S. would be entirely responsible.
For the moment, keep your eye on Venezuela. The situation there must be resolved before Bush invades Iraq. President Chavez is an amazing man, and with the full support of the people, he has thwarted several attempts to unseat him, just in this past year alone. He has also won six elections in the last four years. Hugo Chavez may retain his presidency long enough to see George W. Bush lose his.
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