Chavez Threatens To Cut Off Oil To U.S.

Venezuela recently decided that the oil taken from their country should benefit the people of Venezuela, and not just the robber barons of the world's largest oil companies. To that end, Venezuela nationalized their oil industry.

Chevron (US), Total (France), BP (England) and StatoilHydro (Norway) saw the handwriting on the wall, and renogiated their contracts with Venezuela. They continue to make money there, only now as minority partners.

But the giant U.S. oil company Exxon Mobil decided they weren't going to go along with it. Rather than being happy with a slice of the pie, they decided they wanted to keep the whole thing. They have gone after Venezuelan oil-assets in U.S., British and Dutch courts. A British court has already temporarily frozen around $12 billion in Venezuelan assets.

I guess Exxon Mobil thinks if they can freeze enough of Venezuela's assets in foreign countries, then they can get them to back down on the nationalization and let Exxon-Mobil have their oil. This could turn out to be a huge mistake.

Hugo Chavez is angry at the court actions, and is threatening to cut off all Venezuelan oil coming to the United States. Chavez said, "I speak to the U.S. empire, because that's the master: continue and you will see that we won't send one drop of oil to the empire of the United States. The outlaws of Exxon Mobil will never again rob us."

This is a serious threat. Venezuela currently supplies 12 % of United States oil imports (1.23 million barrels a day). It would be a serious blow to the U.S. economy to immediately have 12% of our imports cut off. It would probably mean oil and gas shortages here. For sure, it would mean much higher prices. Even if we were able to make up the shortage by buying elsewhere, it would be at a much higher price per barrel.

Some of you may be saying Venezuela couldn't do it. We are the number one buyer of Venezuelan oil, and they need us to buy that oil. NOT TRUE! China (and others) would immediately step in and buy that oil. Venezuela would have no problem selling the oil. The sad fact is that we need Venezuela's oil more than they need to sell it to us.

We can't blame Chavez for the situation we're in. Even Exxon Mobil only gets part of the blame (as greedy as they are). Most of the blame must go to the Republican leadership that blocked all efforts to reduce our dependence on oil. They were more interested in protecting the oil interests than in protecting the American economy.

If the Republican leaders had just initiated policies that resulted in a 10% less dependence on oil, then Chavez's threat would have little sting (not to mention we'd be on our way to solving global climactic change).