Sunday, February 26, 2006

A Coming Wolf?

Venezuela’s man in Washington, Bernardo Álvarez, just did it again. He hinted that oil supplies to the US could be halted if the diplomatic crisis escalates. This threat has become a theme in Chavez’s speech and a common place among Venezuela’s diplomats.

Is it possible? Can Venezuela cut oil supplies to the US?

Only if Chavez is willing to take an economic shock stronger than 2002's national strike.

During his congressional hearings, Thomas Shannon, US Undersecretary of State for Hemispheric Affairs, clearly articulated the dilemma :

"Venezuela in reality does not sell petroleum to the USA ... it sells it to itself."

Citgo, A Venezuelan oil company, buys Venezuelan oil to refine in US based Venezuela’s refineries. Then it sells the gas in Venezuelan Citgo gas stations. We are talking of roughly 1.4m barrels per day and close to 60% of Venezuela’s oil exports.

Chavez is a big gambler. He already survived a more difficult crisis, one that involved an internal enemy. An external enemy, he may think, would bring the country together.


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