Following up Chomsky's analysis of oil markets

Humberto Muez of the Inter Press Service (IPS), reporting from Venezuela, provides some evidence for Chomsky's take on international oil markets. Here are a few excerpts, go to

http://news.yahoo.com/s/oneworld/20051230/wl_oneworld/65731249031135903892

for the complete article.

Note that Venezuela's CITGO is making cheap heating oil available to poor residents of Boston and New York (The Bronx) but that Chicago has turned down its offer of cheap gas for its buses because CITGO insisted the poor should then ride free. You can support CITGO by buying its gas--closest stations are in Vancouver (at 7-11s).

CARACAS, Dec 29 (IPS) - While this year's record high oil prices are unlikely to come down in the near future, analysts are warning the world's traditional and emerging economic powers to curb consumption, saying that at the current rate, proven reserves will only meet demand up to 2030.

"The current model (of consumption) is suicidal," Venezuelan Energy Minister Rafael Ramirez recently told journalists. "The United States, for example, will use up its oil reserves in 10 years, and after that it will go after its rivers, lakes and forests."

That long-term outlook will also be affected by more immediate political factors, "like the difficulties faced by the United States in the Middle East, rebellious governments like those of Venezuela and (the future administration of leftist president-elect Evo Morales in) Bolivia, or the radicalisation of Iran's leadership," he added.

On the economic front, Mieres said these developments would discourage investment by large corporations.

He also mentioned the competition between China, India and other emerging powers to get their hands on the available oil resources, and the real or expected decline in deposits in the North Sea, the Caspian Sea, Mexico or Siberia in Russia.

But Ramirez asserted that "the responsibility for supplies and prices cannot only fall on the shoulders of producers."

"Importer countries, whether industrialised or emerging economies, should rationalise consumption," he argued.

Ramirez also stated that "the markets cannot be stabilised if political instability is provoked in producer countries, because that gives rise to high costs and uncertainty." He pointed to the U.S. invasion of Iraq, and the George W. Bush administration's pressure on Iran and open hostility towards the Venezuelan government of Hugo Chavez.

This year, international oil relations shifted after the Chavez administration reached cooperation agreements based on oil supplies. Mexico also took steps in that direction.

Chavez launched Petrocaribe, an alliance under which Venezuela will provide 198,000 barrels a day of oil to 13 Caribbean nations, with financing for up to 40 percent of the bill. In addition, Caracas will accept payment in the form of products or services.

But the Pact has sometimes faced difficulties in implementation because the beneficiaries must in exchange purchase products from Mexico and Venezuela.

Caracas also promoted the creation of Petrosur, based on alliances among South American nations that began with supplies of heating oil and fuel oil to Argentina, to be paid for with agricultural and manufactured goods, as well as a contract with shipyards in Argentina to manufacture and repair vessels for Venezuela's oil fleet.

Paraguay and Uruguay will also receive Venezuelan oil shipments under terms similar to those offered through Petrocaribe. In addition, the state-owned oil companies Petroleos de Venezuela (PDVSA) and Brazil's Petrobras signed agreements and will begin construction of a refinery in northeastern Brazil.

Furthermore, Venezuela set aside deposits in the southestern Faja del Orinoco - considered the world's biggest reserve of extra heavy crude oil, with 230 billion barrels - for joint ventures with state-owned firms from Argentina, Brazil and Uruguay.

South American countries also foresee the construction of a gas pipeline running from Venezuela's Caribbean coast to the Ro de la Plata (River Plate, located between Argentina and Uruguay). The project will involve Bolivia, whose president-elect, Morales, is a political ally of Chavez and other left-leaning leaders in the region.

China, which will purchase 5.4 million barrels of Venezuelan oil this month, hopes to receive a total of 300,000 barrels a day from this country starting in 2006, and has explored with OPEC the possibility of long-term cooperation mechanisms.