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December 1, 2007
Bring it Hugo. . .
Hugo Chavez is threatening the U.S. that he will cut off Venezuelan oil supplies should any news organization or the United States government question the elections this weekend. [LINK]
I say to Hugo, "Go ahead you mental midget. Cut off oil to the U.S., IF you can. I double-dog dare you."
Personally I think it would be FANDAMNTASTIC if all of the Citgo stations in the U.S. closed their doors while they scrambled to make contracts with BP, RD Shell and Exxon to get their pumps back on. I think it'd be even more TRETOTALMENDOUS if gas prices spiked in the middle of the holiday shopping season. The spike wouldn't last more than a few days. Now let me tell you why Hugo.
You see Hugo, we've been conducting an experiment up here that really doesn't get much play in the media. Contrary to popular belief, gas is a supply and demand commodity, and unlike many nations in the world, the U.S. government understands this and has long since prepared for actions like the one Hugo is contemplating. The U.S. government can, with the stroke of GWB's pen, open our strategic oil reserves at any time and absorb any type of hit a tinpot South American wannabe dictator can muster.
IF we so choose, we can take your punch and not even be fazed. Another possiblity is that the U.S. government do nothing and let the markets hash out your ploy. You see Hugo, if you cut off oil to the U.S. you have two choices, either sell it to someone else at a discount, or take an economic hit on Venezuela (which wouldn't do you any favors Hugo, just like losing all those gas station contracts to Exxon wouldn't be a good move for you Hugo-baby).
So let us suppose that Hugo does sell his oil to someone else, he'll have to discount it because of the higher cost of transportation, and it's unlikely he'll find someone to take as much of his oil as the U.S. does. Maybe China will step up, but Hugo will have a hard time turning a profit if they do. Guess what though, if Hugo does cut off oil to the U.S. and sell it to China, that frees up oil that China would have bought from someone else, and we can simply buy that. No problem for us, but a big problem for Citgo retailers. They probably won't come back to you Hugo if you cut their throats right at Christmas time, they'll be jumping into bed with another oil company and you'll have just shot yourself in the foot.
Oh wait Hugo, there's more. You see, we have literally thousands of oil wells in the U.S. that can be opened up for production in as little as 5 days if the economic conditions demand it. We'd rather not use our petrochemical resources if we can buy them from someone else and save ours for later, but if we need to, if we want to, we can bring reserve domestic supply online and CRUSH YOU while simultaneously giving our own economy a major boost.
The estimates are a bit fuzzy, but we could pummel world petroleum markets to the tune of a $40 a barrel oil in relatively short order if we needed to. We could, again, if we wanted to, could dump our oil into the world market and offer anyone oil at $50 or $60 a barrel and send oil-producing nations economies into a tailspin. A phone call from Bush to a few select individuals could begin a tremendous increase in domestic supply and send the markets reeling. We don't do this because we have a number of allies who would be hurt by such a move and there are more than a few world economies that we want to prop up by letting oil prices creep higher and infusing these nations with cash. We could change that if we felt pressured, or we could not, we could play another game. Are you ready for it Hugo?
We can let you play your game and simply do nothing as world oil prices spike into the $150 a barrel range. Since oil is a globally traded commodity and since Hugo doesn't really have all that much control over where his oil goes once it leaves his soil, he'd be forced to sit it out. I don't think his regime would last very long as their economy (90% of which is oil revenue) suddenly dropped to a fraction of it's current activity level. The riots in the streets of Caracas would be epic.
I don't think you'd be making any friends in the world community as you held back your oil and prices spiked just so you could conduct your coup. The Euros may fawn over you now, but drive their gas up over the 10euro a liter mark, and they'll turn on you in an instant. As gas prices pushed up over $4 a gallon here in the states, public opinion would fall flat. By the time November 2008 rolled around, the American electorate would be screaming from the rooftops for a Republican President and Congress to open ANWAR and the capped wells in Louisana, Texas and the Gulf.
Please Hugo, please! Cut off our oil! Pretty please, I dare you!
Make no mistake, we play softball in the world's economy when it comes to oil. We recognize that developing nations need the revenue if they can get it and we can afford higher gas prices without any real pain. YEAH, I know, people will imagine they feel pain from a spike in gas, and that won't go well for you Hugo. As people get pissed off at you, they'll begin clammoring for a Carrier group to park itself off your coast. In short order, you'd find yourself in a situation where you're broke, your people are rioting, your military fades away because they aren't getting paid and then, if you're own people don't take you out, forced regime change wouldn't be far behind.
Please Hugo please! Cut off our oil. I'd love to see us switch from playing softball with you to rock-em sock-em football, and we'd kick your ass up and down the field. AND WE'D STILL BE GOING BACK AND FORTH TO THE GAME IN OUR HUMMERS, YUKONS, ESCALADES AND EXPEDITIONS!
You can't afford to play this game with us Hugo, you LITERALLY cannot afford it.
Go ahead Hugo, have your little tantrum. Make our day.
--Jason
Posted by JasonColeman at December 1, 2007 11:41 AM
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Comments
Love the post. You make a really good argument about the whole idea of Hugo's threat. Good news this morning is that he didn't win the election!
Posted by: gas additive at December 3, 2007 11:04 AM
