As I write this article, oil is currently trading at $79.02 according to CNBC.
Crude oil futures dropped Tuesday as the market anticipated months of weak demand even if the U.S. government succeeds in preventing the economic downturn from deepening.
The Mideast worries and talks about reducing output, but the one with the most reason to worry is Hugo Chavez. No one, and I mean not one single petty tyrant in all the oil-financed tyrannies in the world, is as dependent on oil revenues to maintain himself in power. Venezuela relies on oil income for more than 40 percent of its budget and Chavez squanders every day millions of dollars of oil revenues while oil production has fallen by a quarter since he won power.
The official rate of inflation is 22.5 – the highest in Latin America. However, inflation in some sectors, such as food, is 50%. The Venezuelan economy is in tatters now and will get a lot worse.
In the meantime, “Baby needs a new pair of shoes.”
(link Not Suitable for Work due to language)
“Baby needs a new pair shoes“:
Earlier this month – when oil was still in the $90 range – Chavez was telling the boliburguesia to cut down on certain types of vehicles, celluars and parties. They’ve learned to use the foreign currency markets, and they want their money. These bureaucrats are happy to have Chavez in power as long as he bankrolls the lifestyle they have so become acustomed to under Chavez. “Baby needs a new pair of shoes.”
Chavez sent $300 million to the FARC earlier this year. “Baby needs a new pair of shoes.”
Chavez is buying Russian jets, and the Russians don’t take Mastercard. “Baby needs a new pair of shoes.”
Chavez has all sorts of new business deals with Iran, and the mullahs don’t take Mastercard, either. “Baby needs a new pair of shoes.”
Chavez also sends financial support Argentina, Bolivia, Ecuador and Nicaragua. “Baby needs a new pair of shoes.”
Lord knows what kind of deals Chavez has with China. “Baby needs a new pair of shoes.”
Lots of babies, lots of shoes, all coming from oil proceeds. And now oil’s down.
Noticias24 (in Spanish) and El Universal ( in English) both publish a report by PFC Consulting Limited, a Washington-based wholly owned subsidiary of Power Finance Corporation Limited, and German bank Deutsche Bank, which states that Venezuela is the most vulnerable country to the financial crisis:
PFC considers that Venezuela needs that the price of oil averages USD 97 to balance its accounts while in 2000, the South American country required that the price of the barrel of petroleum was USD 34.
And the price of oil can plummet even lower,
Goldman expects crude to average USD 75 in the fourth quarter and USD 70 at the end of the year, but added: “Should the financial and economic crisis cut deeper into demand, the market could fall as low as USD 50 a barrel.”
Oil drops, Hugo sweats.
Daniel‘s been looking at outcomes and odds for the short term (less than a year). All the options hinge on Chavez, and his future is directly linked to the price of oil.
I will speculate further and say that if oil stays below $80 for an extended period of time, Chavez will be looking at real estate in a retirement community near Cannes.
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“I will speculate further and say that if oil stays below $80 for an extended period of time, Chavez will be looking at real estate in a retirement community near Cannes.”
No, I suspect His Bolivarian Majesty is, more likely, going to end his days like this jaw-jutting pipsqueak:
J G says
As much as I’d like to see it happen, these petty despots, once entrenched, seem to be able to hold on tenaciously even in the fact of great popular disapproval.
Pat Patterson says
Slightly O/T but the American Petroleum Institute’s monthly bulletin related a story, without attribution, that the Iranians actually signed one of those almost always soon to be consumated press conference contracts that Pres. Chavez is always announcing. But during the recent conference they announced that this was the first oil contract they had signed where the buyer of refined oil, Venezuela, had agreed to pay in Euros. Apparently that was somewhat of a surprise to the Venzuelans as the bulk of its sales are to the US which for some strange reason still pays in dollars.
Supposedly the Iranians agreed later to look into the contract to see what the Venezuelans were so unhappy about.
A. C. says
More likely, I think, than looking for retirement homes would be for Chavez to manufacture a “crisis” with either the U.S. or Colombia. With the current economic crisis in the U.S. Chavez might guess that he could get away with a great deal while the U.S. government is too busy with the markets. On the other hand, some kind of action against Colombia would also bring with it the prospect of expansion, and additional income from drug money. FARC would be a ready ally against Columbia, also.
Kevin R.C. O'Brien says
Don’t forget some of Chavez’s other adventures: like sponsoring FARC. And FARC doesn’t take, etc., etc.
Kevin R.C. O'Brien says
Oops. See you got that
swift boater says
What, Hugo worry?
He knows once the Messiah enters office in late January that he will be the recipient of American foreign aid.
H. SHANAFELT says
RIGHT- FOLLOWING the election of a NEW President…Prior to Thanksgiving–SOMEONE from the C.I.A. Needs to eliminate this “CASTRO-WANNABEE” with “EXTREME PREDJUDICE!” (HEs’ ‘beggin’ to be wacked’ WASHINGTON!!) Then …No More CITGO ‘terrorist Gasoline’ @ the PUMPS!
Maybe he’ll smell brimstone and look down and see his feet in a fire.
Bob the Bookworm says
I am little confused about Chavez’s relations with Obama, Da Silva, Correa, the FARC, and other leftist groups… Does anyone know about this so-called “Latin Schism” going on? I think between various factions for/against the old Latin Tridentine Mass, and perhaps for Socialism, or a for “a reform of the reform”? I read about the Politically Powerful Cardinal Castrillon Hoyos of Medellin, Colombia. He is considered by some as “conservative” and is known for his High Latin Masses around the world! Hoyos is President of ECCLESIA DEI, here’s his site:
On other hand, there is the Swiss-based FSSPX (http://www.sspx.org), which seems to be into the banking elements of the Latin Traditionalist rebel movement of sorts (as was the FARC-EP into guerilla wars working from Havana, Cuba, cf. their site: http://www.farcep.org/). I guess Hoyos is trying to heal various schisms from the right (AUC) and the left (ELN). Read these articles about his “peace program”:
HOYOS: “With sadness, I remember when you were listening to the conversation I had with Raul (Reyes). You were on the phone and I asked for the personal well-being of each member of FARC. As a priest, a Christian and a Colombian I have never thought about just one side, I have thought about the good of each and every one because we are all children of God,”
Is the Ecclesia Dei Commission the answer to this?
It’s weird, because from what I’ve been reading about Pablo Escobar and Cardinal Hoyos there’s some kind of Alliance going on (I guess he got a few bucks for this work from the kingpins in Colombia?), but I can’t put my finger on it. Maybe also Marcel Lefebvre was involved? Maybe not, I have no clue! But, I heard rumors that Dan Brown maybe writing a new book on the topic about the secretive Priory of Sion.
In fact, I got inspired from this article on a recent book review that a Liberal web page had about the title “Communicatio in Sacris”, you can read it here (I think from a Marxist web site):
If anybody knows about this “Communicatio in Sacris” book, please post a review! I am thinking of buying a few copies (maybe a box, and pass copies out to comprades). I actually was dissapointed with Dan Brown’s Da Vince Code (it seemed to be a Anti-Catholic and Masonic-Occultist book), but I want to make sure the “Communicatio in Sacris” title is worth the bucks, esp. from Barnes & Noble of all bookstores! As you may know BN don’t like giving refunds:
Finally, about a “new pair of shoes”, it appears Hoyos could use a few new pairs of “pontifical shoes”:
O the pontifical Tridentine sandals are on sale:
Bob the Bookworm says
Quick question: Is this site affiliated with a political party? Is there a donation collection?
Please excuse my skepticism, but I’m pretty sure Iran doesn’t export refined oil, and why would Venezuela be buying oil from Iran in any case?
The situation for Chavez is worse than what you state. Venezuelan oil, which has high sulfur content and can only be refined in a small number of special refineries (almost all in the USA) draws considerably below the world price. If world oil is at $80/brl, I doubt Chavez is gwetting more than $60.
Pat Patterson says
Closing price for light sweet crude was around $73.32 today and as The Diplomad, again welcome back but please fix the comment page as I get failure to deliver messages every time, noted above Venezuela is only getting $62.00 a barrel and futures look even grimmer for an economy based on $125.00+ as futures prices are looking to fall below $55.00 a barrel.
The only real negative would be that if a border skirmish or war breaks out with Colombia Chavez’s army will not be stuck on a road blocked by striking truckers because he will have destroyed that segment of the economy. Though, I do expect to see hundreds of volunteer Bolivarans following the armor transports carrying jerry cans and siphon hoses much like the grenadiers of the Wehrmacht during the Battle of the Bulge. Or better yet putting hub caps under leaking tanks and using sponges to get the precious oil. Ka chunk, ka chunk. Gratuitous reference to Road Warrior there.
Here is some info about the Venzuelan oil price, courtesy of Devil’s Excrement.
Cynical Synapse says
Best buddies Hugo Chavez and Vladimir Putin were both high on the hog when oil was over $120 per barrel. Now, poor Hugo might not even be able to keep the lights on. Let’s all cry crocodile tears for poor Hugo, who’s antsy about lower oil prices.