<Leave the SPR alone already The Oil Drum How to Escape the Oil Trap>

11 comments on Econbrowser on Sweet and Sour...

Comments can no longer be added to this story.

| Show without comments | PDF version

Oil Wars on August 22, 2005 - 7:18pm Permalink | Subthread | Comments top
Dave:

Care to comment on what you meant by Chavez not being able to get stuff out of the ground?  They are already producing at their OPEC quota so they're aren't going any higher than that.  

Also, there isn't "unlimited" demand.  Demand is pretty inelastic. So if there were 3 or 4 million barrels more on the world marker right now prices would be right back down on the floor.  Venezuela, could easily ramp its production up to that, and in fact there production would already be up by that much if Chavez hadn't come to power.  Before Chavez, when Guisti was running PDVSA they were aiming at producting 6 MBPD by this time.  That alone would glut the market.

And of course, if Venezuela was still a quota buster so would a others as well.

So there is no dreaming here.  Chavez and Ali Rodriguez (who was the first Venezuelan to be president of OPEC since when...) did exactly what they said they were going to do.

Comments can no longer be added to this story.
Dave Aust on August 22, 2005 - 8:18pm Permalink | Subthread | Parent | Comments top
Oil Wars- most OPEC members have been producing above their quotas since oil went above $30 per barrel (except for Indonesia which has peaked). EIA figures for June 2005 are at http://www.eia.doe.gov/emeu/steo/pub/3atab.html

If the 'market' actually worked, we would see billions being spent on oil tankers, drilling rigs and new refineries. I dont see this, just the pieces of the jigsaw starting to confirm 'PEAK IS HERE'

Comments can no longer be added to this story.
Dave Cohen on August 22, 2005 - 8:23pm Permalink | Subthread | Parent | Comments top
Yeah, OK, I'll respond to that.

This is essentially a political issue. Chavez is talking to China. This makes George "Went to Yale" Bush and Dick "Dick" Cheney and Condy "Oil Tanker" Rice nervous. In fact, our Secretary of State has made threatening remarks toward the Chavez government, which, by the way, I support. Why is the Chavez government talking to China? To create a powerful negotiating position vis-a-vis the "Great Satin" -- that would be US :)

And why does Chavez need a powerful partner like China to either coerce the Americans or do business with Asia? Well, the answer is because he does not have the capital investment to get that lousy but large amount of crude of his out of the ground. If he could do it on his own, he could flood the market as you imply and become the new Saudi Arabia with those "heavy" oils of his. But he can't, it's that simple.
Comments can no longer be added to this story.
Heading Out on August 22, 2005 - 9:39pm Permalink | Subthread | Parent | Comments top
If you go to the left hand side of this site you will find The Blogroll that contains the site OPEC Production (EIA) which quotes the Venezuelan quota at 3.223 mbd and their actual production at 2.5 mbd (The OGJ has them down around 2.1 mbd).  While we would welcome evidence that Venezuela is engaging in quota busting, I would suggest that the evidence to date is stacked against that position.
Comments can no longer be added to this story.

11 comments on Econbrowser on Sweet and Sour...

Comments can no longer be added to this story.

| Show without comments | PDF version