Saturday, May 10, 2008

Venezuela, Nigeria pose serious issues for oil supply as prices rise quickly; could Saudi Arabia be next?

Venezuela is one major sources of high quality crude for refineries. The EIA provided a study of the short term effects of the temporary loss of Venezuelan crude in 2002, by Joanne Shore and John Hackworth, here.

US intelligence services have been doing some “hacking” themselves into caches and computer files of socialist president Hugo Chavez, and apparently believe that Chavez is trying to spread unrest in neighboring Colombia, and interfere with efforts to stem drug traffic. This can pose grave problems for the United States. Action could mean further attempts by Chavez to nationalize oil resources for to implement an 1970-s style “Arab oil embargo” on the US.

Jose De Cordoba and Jay Solomon give the details "Chávez Aided Colombia Rebels, Captured Computer Files Show," in the May 8 Wall Street Journal, link.

The political issues in Venezuela are a major topic in the recent film “The War on Democracy” by Christopher Martin and John Pilger.

Oil companies have had to deal with violence in Nigeria as well, related to the attempts since 1999 to install “neoconservsative” style democratic reforms. Well known NYC author and internationally-exploring journalist Sebastian Junger has an article “Blood Oil” (analogous to “Blood Diamonds”) in the Feb. 2007 Vanity Fair, here.

Even so, American crude inventories right now are high, according to a story by Robert Tuttle in the Bloomberg News, May 7 here. However, the intelligence stories regarding Venezuela and Colombia surfaced May 9 and may have contributed to the record price of $126 a barrel.

But international tensions in Venezuela and Nigeria would seem to run the risk of tempting terrorists into further attacks on the major production facilities in Saudi Arabia or on tankers in the Gulf region, as in the movie “Syriana”, or the CNN special "We Were Warned".

Update: May 15. An accident (rather than violence) led to an oil pipeline explosion in Nigeria today. CNN video link is here.

Picture: Chickens at Mt. Vernon Estate in the slave house. "The sky is falling."

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