Can He Do It? And Other Tales from the Oil Front

According to Michael Rowan and Douglas Schoen, writing in the LA Times (free subscription required), Hugo Chavez could trigger a global recession all by his little lonesome self effective December 2 of this year. Here's how:

On that day, if Venezuelan citizens pass the dozens of constitutional amendments on the ballot, Chavez will essentially be granted dictatorial powers -- an elected strongman reminiscent of Spain's Franco, Italy's Mussolini and Orwell's Big Brother. The day could easily deteriorate into one of violence, martial law and suspension of oil production, the latter calculated to inflict maximum damage on the U.S. economy.

I don't think Chavez is totally stupid. Presumably he can add up the dollars, and right now he needs all the cash he can get. He has made a lot of promises to Venezuela's poor, and if he shuts off a cash cow those promises go buh-bye. Rowan has lived in Caracas for several years, as recently as 2006, so one would hope he has better insight than I do. Yet, having read the entire article I came away unimpressed because he, and Schoen, appear to be hyperventilating.

So I went checking over at the Oil Drum and sure enough, there was another article in which Chavez muses about the correct price of oil. He doesn't sound like he is in a hurry to shut off the tap. If he did, it would hurt like hell since Venezuela is in the #3 spot for US oil imports. Would it result in a recession? Given our current state of affairs with housing and credit...ya it could happen. I just don't think he really wants to go there.

But, don't worry, be happy, there's lots of oil out there no matter what Hugo does. The Saudis should know after all.

One of their Princes has just signed up for a private A380 superjumbo. He has all sorts of money but you know that petrodollars gave him his start. And he has lots of relatives in the House of Saud that need looking after. However, I have to say the American version of conspicuous consumption pales in comparison to that purchase. If imitation is the sincerest form of flattery, then I should wipe tears of joy from my eyes at the thought that yet another country has fully signed on to the American way of life. Keep that plastic card humming Bubba.

Happy Motoring!