When pigs grow wings and fly

The Peruvian prime minister sure put his foot in it recently. Never ask what “it” is; just be thankful it didn’t come out of YOUR mouth:

Venezuela rejected on Friday reported comments by Peru’s prime minister predicting an end to President Hugo Chavez’s support if oil prices fall.

“It is precisely those who continue accusing President Hugo Chavez of meddling in the politics of other countries who end up meddling in our politics,” Vice President Jose Vicente Rangel said, calling the declarations by Peruvian Prime Minister Jorge del Castillo “unacceptable.”

Del Castillo was quoted in Peruvian media this week as saying that Chavez did not present a “stable proposal” and that his government would fail to leave a lasting mark.

“When the price of oil falls, ‘Chavismo’ ends,” Del Castillo reportedly said.

“When the price of oil falls?” BWAHAHAHAHA! Oh stop, Jorge, you’re killing me. You seriously believe the price of oil is still subject to the wild market fluctuations of the past? You haven’t been paying attention lately, have you?

Listen, Jorge. Reputable scientists are saying we’re probably past peak production right now. The easy-to-reach, easy-to-process light crude reserves of Saudi Arabia have been vastly overstated, and the truth about those has been hushed up for a long time. Saudi Arabia is over the hump, and will soon be played out, thanks to its long habits of denial and overproduction.

Iraq? Surrrrre it might pay for its own decimation, if only those companies for whom it was snatched weren’t so greedy for profits. The profits of that war are privatized, and its costs socialized–that is, taxpayers will be financing the owners’ habitual feast on the world’s second-largest proven reserves. Isn’t that special?

Iran? Uh, nobody wants to go there. The bulk of Iran’s population is now young adults, of prime military recruitment age. If Dubya–or his successor–is dumb enough to start eyeballing Iran, thinking that the world’s #3 proven reserves look tempting enough to risk American lives for, millions of young, healthy Iranians will put paid to that idea. And the price of oil will not fall; on the contrary, it will rise to heights that make the current stratospheric levels look knee-high.

Which leads us back to Venezuela. Venezuelan crude is heavy; it’s more like liquid asphalt than oil. There’s more oil under Venezuela than Saudi Arabia, when you get right down to it; it is not anywhere near its full production capacity. In that, it’s one of the few oil countries not past peak. It’s not the most lucrative potential target for an oil war, though, because of the heaviness of the oil, so it’s on the back burner for Washington right now. Extracting and refining it costs a lot more, but at current prices, it’s more than feasible. Remember, Chavez originally figured on a modest price band of $22-28 US per barrel as being optimal for OPEC; this would enable him to produce and profit sufficiently to fund his Bolivarian Revolution. What’s the current price, again? (Sheesh…no wonder the project’s moving at such a roaring pace lately…)

Now, not to be too hard on you, Jorge–you’re probably working with old information here. Perhaps you’re thinking of the failures of Carlos Andres Perez, who was president of Venezuela in the 1970s. Perez, you see, had some of the same ideas as Chavecito. Use oil revenues to fund infrastructure and public services–great idea! But Perez’s plans foundered when the price of oil plummeted–not so much because of market vagaries per se, but because of weakness and corruption within OPEC, and Venezuela itself. When a member country breaks its own OPEC quota, and other OPEC countries follow suit, can anyone honestly expect the price of oil to remain at a level that makes grand plans feasible?

So Perez got greedy (he made a pretty penny, or should I say bolivar, from oil, during his presidencies), and ultimately Venezuela paid–and suffered. Is this situation looking strangely familiar? I refer you back to Iraq: privatized profits, socialized costs.

Meanwhile, Chavecito has done one thing that you refuse to give him credit for, Jorge–he has learned from his predecessor’s mistakes. And he won’t repeat them. When the price of oil drops a few dollars a barrel, as has recently happened, he orders a production cut at PDVSA. Presto! Chavismo at work–maintaining control so the market freefalls of the past remain…well, in the past. And so do the blunders that tripped up Carlos Andres Perez.

And how’s that Bolivarian experiment going? Well, the results speak for themselves. Chavismo is such a roaring success that it can now be exported. Bolivia is following suit, using its vast natural gas reserves to finance its own projects. And Chavecito has enough left over that he can easily offer deep discounts on CITGO oil to impoverished people in the US, as well as selling to Cuba and several Caribbean countries at a similar discount. Plus, he’s bought up Argentina’s debt (and turned a profit on those debt bonds!), getting the IMF off that country’s neck–for good, one can hope. He’s even expanded his mercy missions, offering free medical treatment in Cuba to anyone who can’t afford it at home. Thousands all over Latin America have benefited.

And all this was made possible by controlling the production and price of oil, plus the added effects of Peak Oil and Gulf War II (for which there also appears to be no end in sight.)

No, I don’t think Chavismo is in any danger of an early fall. Unless pigs suddenly grow wings and learn to fly.

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