The collapsing Venezuelan oil industry
Venezuela’s Petroleum Imports Surge. No, it’s not a typo. It’s imports they’re talking about (emphasis added):
Venezuela’s state petroleum company, Petroleos de Venezuela, increased petroleum imports by nearly 150% between the first quarter of 2007 and the same period this year, bank statistics show.
A report by the Venezuelan central bank this week demonstrated that petroleum imports reached $1.5 billion during the first quarter of 2008. The imports, which include diesel oil, gasoline and chemical additives for gasoline products, are the country’s highest in more than a decade.
Additionally, Venezuela’s lying about its total oil production:
Venezuela’s state oil company says it produced 3.15 million barrels per day last year. Analysts including the Paris-based International Energy Administration put Venezuela’s production at around 2.4 million.
Mr. Garcia said that while the petroleum sector reported growth of 3.3% in the first quarter, this figure is “not consistent with the number of active rigs.” PDVSA declared an emergency shortage of oil rigs last July, and the company’s year-end report showed they had just 111.
My friend Brian Faughnam of the Weekly Standard Blog:
Venezuela should be awash in wealth derived from the high price of oil, but Chavez’s government has been siphoning off oil profits rather than reinvesting them in production. Combine that with the seizure of assets from private companies and the confiscatory windfall profits tax on the private firms that remain, and suddenly Venezuela seems unable to make money off its vast oil resources. (More on the failures of state-owned oil companies here.)
This is more bad news for Hugo Chavez, who has seen Brazil check his ambitions in the region, and who has been embarrassed by the discovery of his ties to FARC (the death of whose leader is mourned by Chavez). At home his enemies are finally presenting a united front against him. It may be only a matter of time before Chavez has to decide whether to depart the scene gracefully, or to cling to power by force.
The US Congress should jump at this opportunity and aggressively enact laws allowing drilling at ANWR and offshore, the further development and use of coal, and the building of oil refineries and nuclear power plants. These measures would all cause the price of oil to drop immediately and in the long run. They would also substantially weaken the power of oil tyrants like Chavez and the Middle East dictators.
Will Congress do that?
Of course not.
Via Larwyn, Don Suber posts that
Newt Gingrich gets the petition rolling to get Congress to open up offshore drilling.
The group is American Solutions, a 527 started by Newt Gingrich. Sign the petition here
Let’s see if Congress will listen.