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Gas is cheaper than the water: Venezuela is rich with oil, and its fields provide President Hugo Ch?vez with fuel to fan political flames(Newsday (Melville, NY) (KRT) Via Thomson Dialog NewsEdge) May 02--CARACAS, Venezuela - On a recent evening in this oil-rich country, construction worker Guillermo Perez rolled up to a gas pump in his battered 1984 General Motors Century sedan and filled the tank for the equivalent of $2. "We Venezuelans take gas for granted, like the air we breathe," said Perez, 50, with a grin. "I feel sorry for you Americans." Venezuela, which is sitting on the largest crude oil reserves outside the Middle East and possibly in the world, has the cheapest gasoline prices on the planet - 12 cents a gallon for economy. You can fill an SUV with premium here for $2.25 - about one-fifth the price of a bottle of water. But, ironically, Venezuela also is one of four countries whose politics are contributing to record prices at U.S. pumps by sending jitters through the world petroleum market. Together, energy experts here estimate, concerns about volatility in Iran, Iraq, Nigeria and Venezuela are inflating oil prices by about 15 percent. Hardly a week passes here without socialist President Hugo Chavez threatening to halt oil sales to the United States, which he insists is plotting to invade Venezuela to steal its oil. If the United States attacks, "We won't have any alternative but to blow up our oil fields," the pugnacious Chavez declared in one recent speech. "They aren't going to take that oil." Chavez, a former paratrooper who likes to refer to President George W. Bush as "Satan," also is cultivating Washington's nemesis Iran, tightening ties with Cuba and other leftist countries, and seizing control of key foreign oil company operations here. "Chavez is acting like Castro with oil," said Pietro Donatello Pitts, editor of the Caracas-based magazine LatinPetroleum and Web site www.LatinPetroleum.com. "That creates political uncertainty, and political uncertainty increases oil prices." The concern continues even as the Bush administration - no friend of Chavez - adamantly denies any plan to invade Venezuela, and most political analysts dismiss Chavez's accusations of an impending attack as pandering to his leftist base. Despite the worries, this Caribbean country that's a few days' tanker trip from the United States is not the main bête noir for inflated oil prices, Pitts and other oil experts emphasize. Venezuela continues faithfully to sell four-fifths of its exported oil to the United States - the world's largest oil consumer - and hopes to double petroleum production within six years. It also is courting private investment in its reserves of natural gas, the world's eighth largest. In contrast, Iraq is ravaged by war, Iran's new president is forging ahead with a nuclear program and calling for Israel to be wiped off the map, and guerrillas are sabotaging oil shipments in Nigeria. Consequently, most foreign oil firms here are gritting their teeth rather than bailing out. "In respect to what is going on in other nations ... Venezuela is a good place to do business," Ali Moshiri, Chevron Corp.'s president for Latin America, told reporters here last week. But increasingly wary foreign companies have pared investment here to the bare minimum, and that has slowed production, industry analysts say. Among other moves, Venezuela last year ordered foreign oil companies to give the government majority shares in all light-crude extraction and production operations, and dramatically increased taxes and royalties. It seized the oil fields of companies that dissented. Last month, the government suggested it will impose similar controls on heavy-crude oil operations, which oil companies have been eyeing avidly. Though some industry analysts describe the past contracts as giveaways, the turnaround shocked Big Oil. Also fanning concerns are reports that oil production here has dropped since Chavez fired 18,000 oil workers after a crippling strike 3 ½ years ago at the state-run oil company, Petroleos de Venezuela. The Venezuelan government insists production has returned to pre-strike levels of roughly 3.3 million barrels per day, but many independent sources put the figure closer to 2.6 million barrels per day. Whether Chavez is intentionally trying to hike prices remains the subject of vigorous betting among oil cognoscenti here. But his actions are clearly inspiring other leftist leaders. Yesterday, Bolivia's new leftist President Evo Morales, who had met with Chavez and Cuba's Fidel Castro over the weekend to sign an energy trade pact called the People's Trade Treaty, formally decreed the nationalization of Bolivia's vast natural gas resources. The move was long in the works, but Morales yesterday gave foreign companies only six months to renegotiate their contracts or bail out. To punctuate his point, Morales dispatched troops to occupy the gas fields. For nearly a century, Venezuela has been the world's most reliable oil supplier. This country provided more than two-thirds of petroleum used by the Allies during World War II. ("Who knows if Venezuelan oil fueled the dropping of bombs on Hiroshima ... and Nagasaki?" Chavez wondered aloud in a speech last week.) During every Middle East crisis that has disrupted oil supplies in the past half century, Venezuela has increased production or sold reserves to heat U.S. homes and run U.S. cars. Today, one-sixth of U.S. oil imports still come from Venezuela. But Chavez is aggressively courting alternative markets, including China, India and South America, and also is starting to sell oil at subsidized prices to leftist allies across the region. In addition to infuriating Washington by defending Iran's nuclear aspirations, Chavez's government plans to send state oil company technicians to Iran for training. "Venezuela has always been the country that came to the rescue. But now, as the world looks to Venezuela to help during this time of conflict in the Middle East, it acts as if it can't be counted on," said Jose Toro Hardy, a former Petroleos de Venezuela board member and Chavez critic. But at the gas pumps, most Venezuelans aren't worrying too much about energy politics. Gas, which has been subsidized since oil was discovered here nearly a century ago, is dirt cheap even with the average Venezuelan income only $4,080. Still, gas isn't a universal panacea in this country where more than half the work force holds part-time jobs or none at all. "Sure, it's great gas is cheap," said Juan Arias, 38, an unemployed Caracas resident. "But how about a job?" Freelancer Clara Long contributed to this story. |