Tuesday, April 04, 2006

$50 a Barrel Chavez says

A reader alerted me to a must read article in The Guardian in which Chavez states he wants to fix the price of oil at $50 a barrel. He questioned the motives for such a move.

Without morning coffee, my response was a PR ploy now that the USA's (75% of his exports) summer season will spike demand. After reading the article, this is only partially true and pales in comparison to his true motives.

Chavez is poising Venezuela to become bigger than Saudi Arabia, by allowing its crude to be counted as part of its official reserves.
A long-term agreement at that price could allow Venezuela to count its huge deposits of heavy crude as part of its official reserves, which Caracas says would give it more oil than Saudi Arabia.

"We have the largest oil reserves in the world, we have oil for 200 years." Mr Chávez told the BBC's Newsnight programme in an interview to be broadcast tonight. "$50 a barrel - that's a fair price, not a high price."
However, it is expected that his proposal would be faced with strong opposition from the rest of the OPEC countries.

In my opinion, wealthy Arab nations who have been thriving on oil prices, and terrorist groups who have also been thriving on oil prices, will not allow a lock in the price of oil.

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