Courtesy of one “Douglas A. McIntyre”, a little piece of absolute hogjaw twaddle:
The prevailing wisdom is that oil prices will move down. They have already dropped from over $78 to $72, and most observers think that is only the beginning. Troubled financial markets and the potential of a slowing global economy should being demand down.
Don’t tell the president of Venezuela, nut job Hugo Chavez any of that. He wants the world to believe that he can control the price of crude, which is only partially true. According to Reuters: “I’ve always said that oil prices are headed straight to $100 per barrel,” Chavez said during a televised speech. His argument is simple. Supplies are dwindling and consumption is still going up.
Meanwhile, speaking of simple arguments: This guy is about as simple as they come. He claims that the drop from $78 to $72 a barrel for oil is a sign of a trend? Pfffft. One day’s or week’s variation in the market does not a trend make, Mr. MacIntyre. “The prevailing wisdom” is neither prevailing, nor is it wisdom; it is wishful thinking all the way. This drop is short-term, and should therefore not be seen as indicative.
Nor is there any validity to the idea that “the potential of a slowing global economy should bring demand down.” Oil is one of those things that keep right on selling whether the economy is up or down; the demand remains constant. It is not (yet!) a luxury item. People commute to and from work every day; plastics production goes on; oil is integral to far too many processes to be dispensed with altogether. But the oil supply is dwindling, and that is a fact. As it dwindles, its price will rise accordingly. One need not be an economist to understand that. But if you want an economist’s view, here is a British government study to prove it.
Of course, let’s not forget that Mr. MacIntyre is misquoting Chavez, who is not setting those rising prices (he has no control over that; he is not a commodities trader but a president, hello!) Here’s what was actually said:
World oil prices are headed for $100 per barrel, Venezuelan President Hugo Chavez predicted on Saturday, and said he will cut supplies to the United States if the U.S. government “attacks” the South American nation again.
“I’ve always said that oil prices are headed straight to $100 per barrel,” he said during a televised speech. “We should prepare ourselves for those prices of one hundred dollars.”
Chavez said high oil prices were the sign of a “global crisis” in energy caused by voracious consumption that has vastly reduced available oil reserves.
Chavez has accused the United States of plotting a bungled coup that ousted him for two days in 2002, though Washington denies the accusations, and has repeatedly made conditional threats to cut off oil sales to the United States that historically account for 12 to 15 percent of U.S. imports.
“No one should think that we’re going to stop sending oil to the United States, no — unless they attack us again,” Chavez said during a speech to leaders of Caribbean nations meeting in Caracas for an energy summit.
“If they attack us again like they did in April of 2002 … there will be no oil.”
I guess this is what prompted the misquotation: Chavez is watching the long-term trend and making a plausible prediction based on what he has seen. Let’s not forget that since he came to power in 1998, Chavez has seen the price of oil skyrocket from less than $10 US a barrel to its current all-time high. And, as president of an oil-producing country, he knows full well that as the more easily available reserves of light sweet crude in other countries peter out, his own country’s heavy crude will replace them. And since that heavier crude is harder to extract and costlier to refine, of course the price will go up. One need not be an oil industry expert to grasp those basic facts!
Nor does one need a crystal ball to see what the implications are for the US if they try to stage another coup for oil. Chavez is right about that, too: the first one was indeed an oil grab. It came right when there was talk in Venezuela about using oil revenues to serve the people, rather than privatize PDVSA and let Big Foreign Oil take over. And of course, right after the two coups of ’02 were reversed, that oil money did indeed go to the social-welfare missions, where to this day it is doing good work.
Some “nut job” that Chavez is, eh? I’d call him crazy like a fox.
I sure pity anyone who relies on this site for its vaunted “insightful analysis and commentary”; I see no such thing. Only ad hominem bullshit (“nut job”–how insightful and analytical!) from a know-nothing who fancies himself a pundit-in-waiting, and is too cowardly to acknowledge any facts which contradict him–or let anyone else respond with same.