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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.
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'
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.