Venezuela's Oil Minister Says OPEC Running Out of Spare Production Capacit

I hope this isn't a dupe, I looked but didn't see it posted.

http://biz.yahoo.com/ap/050405/venezuela_opec.html?.v=1

CARACAS, Venezuela (AP) -- The Organization of Petroleum Exporting Countries is running out of spare production capacity, Venezuelan Oil Minister Rafael Ramirez said Tuesday.

"OPEC's production capacity is reaching its limit," Ramirez told reporters, adding that it is too early for OPEC to decide on a possible half-million barrel per day production increase.

Ramirez argued that geopolitical tension in the Middle East has contributed more to recent oil price rises than have any supply problems.

Oil prices opened at new record highs of above US$58 a barrel Monday, spurred by continuing worries about tight gasoline supplies in the United States.

So, we're basically at peak oil, if only for practical reasons.

is just talk. Opec hoping just the talk will bring down the price of oil. Venezuela is not playing that game. Why would they want the price of oil to decrease.

Some Venezuelan minister said that Venezuela wants a price for oil that ensures a fair profit for Venezuela while it also ensures that developing nations' economies aren't hurt.

I saw a documentary recently about development which said that developing countries' economies were destroyed by the '73 oil price increases. The desperation in developing countries forced them into loan agreements with the IMF and World Bank which destroyed local economies.

It's "power to the people" inside Venezuela's borders, but it's "fuck you" to the rest of the world.

Thanks, Hugo. I can pay, but there are a lot of people who can't.

I think Venezuela has said that they'd like to see oil at $35-$40 per barrel.

It should be priced high, the stuff is running out. Its just going to conintue rising faster than inflation. The higher the price the less will be used, the more non oil execs will try to develop alternative enegry sources. In the long term high oil prices are for the best. One could argue that the oil companies are increasing their profit margins because they have an oligopoly on the market and can artificully manipulate margins. If anything the local governments should be getting a higher percentage of the oil profits, but lowering the price of gas is shortsided and requires the US to oppress the rest of the world. Its no coincidence the US has the lowest oil prices besides like Saudi Arabia.

who are driving up the price of crude. Why else does OPEC create talk hoping the future traders scale back? Venezuela doesn't feel its country should be hurt just so the corporate elite get their profits from gambling on the futures trade.

The people being hurt by this whole oil business is the common people in the countries who have oil and the common people in the countries who use the oil. The corporate elite in the middle are raking in the futures profits.

Global oil policy has been driven by American foreign policy. And American foreign policy is, and always has been driven by American corporate desires, which translates to American CEO desires.

In other words, all this global tension, sixteen hundred American deaths and hundreds of thousands of Iraqi civilian deaths can be laid at the feet of just a handful of greedy executives, who don't have the time to even spend what they already have, much less what they want.

When looked at in this light those illuminati conspiracy theories don't seem so far off the beam. But I/m not an illuminati conspiracy theorist, I limit my conspiracy theories to the Bush family. I think our current problems can be explained by the simple human railing of greed. And greed is particularly egregious when combined with politics, because greed corrupts everything it touches.

I believe what we are seeing today in world politics is a complete realignment of powers. America having been the sole superpower is now seeing that power being eclipsed by the political moves of former minor players. And all this was precipitated by the foolish war that Courageous Leader had to have.

IMHO, if all the pain the world is experiencing results in one thing it will have been worthwhile. That thing is the end of the corporate political system and particularly the concept of corporate person-hood, which enabled all the corruption in the first place.

to the welfare of the people of Venezuala? So he should be getting the best price for the longest time for Venezuala's oil wealth. 'Best price' can be mitigated by other concerns such as effect on the economies of less developed countries, but first comes the welfare of his own people. Note that one of the reasons he remains popular is that the previous long standing policy was 'first comes the welfare of first world corporate interests and their corrupt oligarch bedfellows'.

and the last time I checked, the DNA of people in developing countries and of unemployed people is indistinguishable from the DNA of Venezuelans.

International borders are imaginary lines drawn by human hands. I'm a citizen of Earth first.

Peace.

but venezuala is a small country with a modest amount of oil wealth. If, for example, we wanted to subsidize developing world oil purchases to mitigate the problems of rising prices, my guess is that the bill for that would be about 10% of what we are spending on killing Iraqis and would far exceed anything reasonable that venezuala could do.

Pointing the finger at Chavez seems a bit disingenuous to me.

And why would "we" want to subsidize the price of oil to poor countries when the proper mechanism is for the OPEC pirates to open the spigot a little more and relieve marginal price pressure? The greed of OPEC no knows bounds. They are heroin addicts who, no matter how much of their $$ drug they get, want and need more.

Think for a moment about the chain of incentives there. Your idea would incentivize ever higher price hikes, with more and more of our money flowing through developing countries' pockets right on through to OPEC coffers. No doubt they'd find a way to blame it all on us, anyway.

Where is the outrage, people? There's been no lack of it toward our own WH oil cabal, but OPEC hawks like Venezuela are making them look like pikers. Record high oil prices are already feeding inflation, throwing airlines into bankruptcy, pressuring farmers and truckers, depressing sales of automobiles, and in general, extracting an across-the-board regressive tax from those least able to pay it. Jobs are going bye-bye in industries sensitive to oil prices. Don't forget, everything from pharmaceuticals to plastics to fertilizer to macadam is made from oil.

If there's a silver lining, it's that suddenly, alternative energy is looking a lot more economically attractive. Maybe we'll finally get some serious R&D allocated. But poor people are suffering right now, and it's kicking developing countries right in the gut. Wake up. This is real trouble for millions of people.

Peace.

I think you have a point and you will no doubt not mine oil
pricing based on per capita GNP?

Right?

You can do your part to help the developing countries by
paying more so they can pay less.

The bureaucrats don't have a very good record. See USSR, 20th Century.

OPEC doesn't like markets much either. That's why they formed a cartel. The idea of a cartel is that by artificially restricting supply, you can artificially raise prices. Not Systems, I've seen plenty of your shrieking when corporations do this. But now Hugo gets a free pass?

You're one of those posters who don't bother reading all the way through the posts they think they're responding too. For at least the third time, I *can* pay more for oil, and won't even mind it too much, particularly if it appears to be easing other, less fortunate people's burden.

But it's not. Today, tonight, this minute, people are in trouble because the price of oil has doubled. You love theory. I love something more tangible.

Peace.

so when you have a "market" made up of people who all
have an interest in price fixing you end up with very little
real pricing.

If your worried about the poor paying for gas to get
to work I agree it is hard on them but the entire energy
system needs to change as does the behavior of the auto
industry and consumers.

A market based pricing signal is fine with me.

In a market a seller gets to charge the price that people
are willing to pay. If they charge more then the demand
will drop or others will undercut.

I just don't see why the producing countries should be
demonize for conserving their natural resources by limiting
the rate of their production.

Why not?

Why the heck are you picking on venezuala?

You say elsewhere you want a market based solution, and yet the market based solution for a scarce and essential commodity is ever higher prices.

Ever higher prices are inevitable and are market based. Read up on the difference between 'cheap-oil' and what the world is going to have to rely on when the huge mesopotamian cheap-oil field starts to run out, which would be right about now.

Check this out:

http://www.venezuelanalysis.com/articles.php?artno=1087

Ramirez says that if prices are too high it will kill the economic development that creates a demand for oil. It has to be priced in a range that doesn't shut out the developing world from economic development.

Try a politics-neutral market source instead.

Algeria, Iran, and Venezuela are generally recogized as OPEC price hawks by those in the industry and the market press.

I'm not going to get into a duel of websites with anyone over this. Believe what you want, but remember, when your only sources are openly oriented to one end of the political spectrum or the other, then you are only getting the opinion you wanted in the first place.

"There is no rule more invariable than that we are paid for
our suspicions by finding what we suspect."
- Thoreau

Here is a typical and rapidly-found excerpt from the market press, in this case, the Dow-Jones AIG Commodity Market Index for January 2005, a generally-accepted statistical source respected by market economists and financial traders as authoratative.

"OPEC price hawk Venezuela held out the possibility of production cuts when the cartel meets at the end of January, but described current prices as “comfortable” for consumers and producers alike."

Ah yes, current prices are comfortable, according to Venezuela. Sure Hugo, all those developing countries think $50 oil is comfortable. Not quite as comfortable, of course, as they are for Venezuela.

Whatever. Protect who you want, I can't fight true belief with mere facts. In my book OPEC hawks are greedy pirates fucking over uncounted millions of poor people.

Peace.

Find me the American newspaper that goes to source to report facts about Venezuela and I'd find you the exact same quote.

If you're argument is that the officials are lying to the press, then it doesn't really matter where the quote is published.

(Do I really need to point this out? Don't you think this is obvious?)

By the way, define "price hawk." Is 28-40 price hawk territory? It probably is, but why don't you want to believe that even a price hawk would think 40-100 is way too high? The guy explaines why they want it in the 28-40 range. You don't believe him?

Also, how much was oil per barrel in January 2005 on the date of that quote you have? I don't think it was 50.

I'm sure you wouldn't mind paying more so say Bolivia can
get cheaper oil for it's development.

Right?

Or are your really just worried about them charging us for their
oil at the rate the MARKET will bear.

That's called the free market system last time I checked.

and Venezuela would have basically just given Bolivia a big piece of their oil industry without Bolivia having to do anything.

It would also increase regional prosperity benefiting the
whole area.

They could develop with out the need of IMF loans and
Wolfie's world bank.

Funny I have heard that Venezuela is making exactly these
type of regional oil supply deals.

Why not tax the rich to help the poor, globally?

I think they have one with Cuba (which should make right wingers happy). They trade oil for doctors. But Cuba is a special situation: their economy is being artificially held back by dumb boycotts backed by the US.

For the rest of the world, Venezuela is entitled to expect that those economies can develop and pay market value for oil. Venezuela shouldn't have to sacrifice its development so that the rest of the developing world can develop (and even with Cuba, they're not giving away oil -- they're getting a valuable Cuban resource in exchange: doctors).

However, they are doing a form of that even outside of Cuba. I believe they also do co-production deals with other south and central american energy companies. That probably ensures that those countries get cheaper oil. But even with that, the market is the market. In '73 the third world economies were decimated by oil costs and I think that's what Venezuela is thinking about when they say they'd like to see oil in the 28-35-40 range (or whatever it was).

Venezuela, Mexico to Extend Oil Supply Agreement
July 21st, 2004
Source: Bloomberg

Venezuela and Mexico, Latin America's two largest oil producers, plan to extend an accord that provides oil to 11 Central American and Caribbean countries at preferential terms in exchange for trade perks.

Venezuelan President Hugo Chavez and Mexican President Vicente Fox will sign the extension of the San Jose Agreement on Aug. 3. The accord, first signed in 1980 in the Costa Rican capital of San
Jose, supplies about 160,000 barrels a day to the recipients.

The agreement allows the oil-importing countries to write off the cost of their purchases by selling goods and services at reduced prices to Mexico and Venezuela.

The accord provides extra financing to the oil consumers when the price of crude tops $15 a barrel. Venezuelan crude now is trading at about $33.50 a barrel.

Recipients of the Mexican and Venezuelan oil are: Barbados, Belize, Costa Rica, El Salvador, Guatemala, Haiti, Honduras, Jamaica, Nicaragua, Panama and the Dominican Republic.

Venezuela has repeatedly pushed for the inclusion of Cuba in the accord. Mexico's refusal led Venezuelan President Hugo Chavez to create the Caracas Agreement, offering oil to member countries, including Cuba, at preferential terms.
(snip/)

http://www.manattjones.com/newsletters/newsbrief/20040727.html

~~~~~~~~~~~~~~~~~~~~~~~~~~

When the news of preferential rates for oil makes the rounds, it almost always ignores the other countries which have also benefited from reduced prices since 1980, long before Hugo Chavez loomed into view.

~~~~~~~~~~~~~~~~~~~~~~~~~~

Mexico and Venezuela renew San Jose Accord
03-08-04 Mexico and Venezuela renewed the San Jose Accord whereby the two oil producing nations supply a total of 160,000 bpd of crude to 11 Central American and Caribbean nations at discount prices.
The document was signed simultaneously in Mexico and Venezuela by Presidents Vicente Fox and Hugo Chavez, according to a joint communique.

The San Jose Accord came into existence on Aug. 3, 1980, and it has never been suspended. The countries that benefit from the special crude prices are Barbados, Belize, Costa Rica, El Salvador, Guatemala, Haiti, Honduras, Jamaica, Nicaragua, Panama and the Dominican Republic, the communique noted.
The pact also establishes "a cooperation mechanism to promote the economic and social development of the beneficiary nations."

The cooperation accord finances social-economic development projects in the participating nations, as well as trade of goods and services by Mexican and Venezuelan firms.
Mexico and Venezuela each provide half of the total 160,000 bpd of the crude sold at discount prices.
(snip/)

http://www.gasandoil.com/goc/news/ntl43392.htm

~~~~~~~~~~~~~~~~~~~~~~~~~~

THE CARACAS ACCORD

The Caracas Energy Accord was born of an initiative on the part of the Venezuelan Government under President Hugo Chavez, as an extension of the San Jose Accord. That pact dates back to 1980 and is an energy cooperation programme between Mexico and Venezuela, on the one hand, and 11 Central American and Caribbean Countries on the other. The agreement arose from the need to help reduce the heavy oil import burden on non-oil producing countries in the region, while providing a window for certain concessionary trade and loan arrangements between both sides.


Under the terms of the San Jose agreement, Mexico and Venezuela sell 160,000 barrels a day, divided in equal parts, to the 11 beneficiary countries, under preferential terms of payment. The countries may also recoup up to 20 percent of expenditures under the Pact in the form of long-term loans for development projects


Early in his administration, President Chavez had expressed his determination to improve the terms and conditions San Jose Accord to make it more beneficial to signatory states.


The Caracas Accord now co-exists with the San Jose Accord and is neither an alternative to nor a replacement of the earlier agreement. It was initiated in response to what has been termed “the need to adapt to changing conditions in the hydrocarbons and financial markets”. The new agreement does not involve Mexico, while Cuba is included in the list of twelve beneficiaries. The other eleven beneficiaries are Barbados, Belize, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Haiti, Honduras, Jamaica, Nicaragua and Panama.
(snip/...)

http://www.jaconferenceboard.com/trade_benefits_from_energy.html

160,000 bpd on "favorable terms" to eleven countries. Split evenly between Mexico and Venezuela at 80,000 bpd.

That works out to 15,000 bpd per recipient country...wow, wonder what they're doing with all that oil. Gotta be at least an hour's supply.

The favorable terms are not free oil, not deeply discounted oil, but instead, tier 1 pricing (think of it as wholesale - we get the same deal, because of volume) and credit extensions. In other words, try our easy easy payment plan; you can have the oil now with no payments until January 2006! Oh, and call before midnight, and get this cool loan package (tied to how much oil you buy) that, um, you do have to pay back, with interest, but later, later, when some other politician is in office.

When the price of oil is north of $50/barrel, Hugo can afford to slice a little off the top, can't he? But he still gets to point out how much he's helping. All of the recipients of this magnanimity just happen to be neighbors. Wonder if there is any political calculus there?

I'm sure the Somalis and the Congolese and the Azerbaijanis and the Filipinos and the (fill in your own favorite developing country here) are just beside themselves with admiration.

OK, sarcasm off.

I hate what the oil pirates are doing to people who can least afford it, and it turns my stomach to hear people not only licking the boot that is kicking them, but also praising the flavor.

No disrespect intended to anyone whose opinions differ from my own.

Peace.

signed by the old dictatorship.

All out of ammo?

Hilarious. I am never out of ammo.

I am, however, all out of time tonight. But I have enjoyed watching you twist yourself into a pretzel defending an oil cartel, and telling poor people to suck it up and get over it, but don't worry, windmills and hydrogen are coming...some day.

So, thanks for the entertainment.

I enjoyed your lashing out at the world to defend
an auto industry that can not innovate it's way out of
a paper bag.

I don't think the poor should have to suck it up
I think progressive taxation should be in place to soften
the effect of the price rises on the poor.

I don't think that rising prices are bad because they
provide the stimulus to make the changes needed. Like
developing new energy sources like windmills, solar, more
efficient biomass, etc.

I just think that oil producing countries should be free
to limit production of their own resources. It is called
self determination and I support it.

I'm sure we agree on some things but fighting can be more
entertaining. I liked the "shrieking" comment the best, that
was a good shot.

Barbados, Belize, Costa Rica, El Salvador, Guatemala, Haiti, Honduras, Jamaica, Nicaragua, Panama and the Dominican Republic.


?

So, that means you have an equal entitlement to the wealth of Venezuela as the people of Venezuela?

Yes, I know - you have the same DNA.

North America birth.

How come the world is charging us for our oil?!?!

I wasn't speaking for me. I can pay for gas. I'm talking about the people to whom this represents a catastrophe.

Oh, and I'm not North American birth, either...nice try.

Peace.

adapt we will be.

The longer people can pretend that oil is not finite
the worse the eventual impact will be.

I'm sure you will not mind paying extra so others can
pay less.

I assumed that you were US born because of your attitude of
entitlement to others resources but I'm glad you found your
spiritual home.

You and your assumptions. Seems to be a pattern with you.

Peace.

So much for progessive tax systems.

Deep thinking, that....

Peace.

I heard yesterday that the Indiana State Legislature is considering upping speed limits on four lane divided highways in their state. This is the state where they make Hummers and H2s. I think it is time lower Interstate speed limits to conserve fuel and suppress gasoline price increases.