Oil Soars on Iraqi Move, Venezuela Fears

yahoo.com ^ | Apr 8, 2002 7:05 AM ET | Tom Ashby - Reuters

[Cincinatus' Wife]

LONDON (Reuters) - World oil prices soared on Monday when Iraq announced an immediate suspension of oil exports in protest at Israel's incursion into Palestinian controlled areas of the West Bank.

The news prompted a frenzy of buying by traders who already feared a halt in shipments from the world's No. 4 crude exporter Venezuela.

International benchmark Brent crude oil jumped $1.01 to $27.00 per barrel by midday in London, resuming an assault on a six-month high of $28.15 seen last week.

U.S. crude futures rose 73 cents to $26.94.

Iraqi leader Saddam Hussein said all oil exports were suspended from Monday for a month or until Israel withdrew unconditionally.

Israeli Prime Minister Ariel Sharon vowed to press ahead with its sweeping military offensive in defiance of U.S. demands for a withdrawal.

OPEC Secretary-General Ali Rodriguez (Venezuela) said he will consult with cartel oil ministers on Tuesday and the group could hold an emergency meeting to decide policy.

Sanctions-bound Iraq is the sixth largest oil supplier to the United States, and ships four percent of world exports. Saddam has already called on other Arab producers to embargo the West for its support of Israel, and Libya has backed the call.

Fellow Gulf oil exporter Iran has said a total blockade by all Islamic states would be very a effective weapon, and supreme leader Ayatollah Ali Khamenei called on Friday for Arab states to launch a one month embargo on the West.

The world's No.1 exporter Saudi Arabia has said it had ample capacity to respond to any major disruption.

Industrialized countries fear high oil prices could damage the nascent economic recovery.

VENEZUELAN CONFUSION

Industry sources said Venezuelan oil loadings were halted at the weekend and oilfield output was already down by half, although the Venezuelan leader insisted on Sunday that production and exports were normal.

Venezuelan state oil company executives are protesting against the government's choice of a new board of directors.

Oil market traders said as many as 25 empty oil tankers were at Venezuelan ports waiting to load on Sunday, and one source said production was already cut by 60 percent.

Venezuela supplies about 15 percent of U.S. oil imports. Latest U.S. government data shows it accounted for about 1.4 million barrels per day of crude imports and another 300,000 bpd of products such as gasoline and diesel.

President Hugo Chavez announced the sacking of seven dissidents from the state oil company on Sunday, labeling them "saboteurs."

The Organization of the Petroleum Exporting Countries has cut production by five million bpd since January 2001 to buoy prices, and in March agreed to extend output restrictions until at least its next meeting in June.

Russia and Norway, which both agreed to join OPEC in crude supply curbs, said on Monday it was too early to reconsider the policy now.

[Cincinatus' Wife]

Venezuela Leader Targets Protest (Mon Apr 8,10:03 AM ET ) - By ALEXANDRA OLSON, AP [Full Text] CARACAS, Venezuela (AP) - President Hugo Chavez dismissed seven dissident oil executives, moving to crush a revolt against the leadership of Venezuela's state oil monopoly that threatened the production of one of the United States' top crude suppliers.

Chavez also announced Sunday that he had forced the retirement of 12 other employees at Petroleos de Venezuela, or PDVSA, and warned there would be more firings if the monthlong protest continued.

But rebellious workers - who are upset by recent government appointments to top company posts they say were political - ignored his threats, staging a rowdy protest at the company's Caracas headquarters.

Unionized workers and business leaders plan to support PDVSA dissidents with a 24-hour nationwide strike Tuesday. It will be the second time since Chavez took office that unions and business leaders join forces to strike.

The conflict has handed Chavez one of the biggest challenges of his three-year-old presidency. Oil accounts for a third of the South American nation's gross domestic product and 80 percent of its exports. Venezuela's crude reserves are the largest outside the Middle East.

The five-week labor slowdown has forced operators to scale back production at the Paraguana refinery complex, which produces 70 percent of Venezuela's refined products, according to company sources who have spoken on condition of anonymity.

The refinery was producing at about 50 percent of capacity Monday as loading for six vessels came to a halt, company sources told Dow Jones Newswires on condition of anonymity. Operators had decreased production over the weekend to prevent an accident as labor unrest slowed the flow of gasoline and oil.

Chavez, however, insisted that operations were normal in most of the industry. He vowed not to cave in to PDVSA's "elite," whom he accused of trying to preserve corporate privileges by "sabotaging" the oil industry.

Chavez angered longtime PDVSA executives by naming five of his own political allies to the board of directors and leftist Gaston Parra as company president. Chavez insisted Sunday that he needs political loyalists to trim corporate spending and increase PDVSA contributions to government coffers - a goal he considers key to his promises to combat poverty and corruption.

PDVSA "has always been managed by a political elite," Chavez said during his weekly radio address. "The plan is to return the oil industry to Venezuelans."

In a separate news conference Sunday, Parra said the board of directors will ensure PDVSA complies with Venezuela's policy of strict adherence to production quotas set by the Organization of Petroleum Exporting Countries. Parra accused longtime employees of resisting the policy, which he said has been proven successful by a recent rise in international oil prices.

Fired executives included Juan Fernandez, Horacio Medina, Eddy Ramirez, Gonzalo Feijoo, Alfredo Gomez, Carmen Elisa Hernandez and Edgar Quijano. Chavez did not announce replacements but said he had a long list of qualified professionals who were willing to take the jobs.

Last week, thousands of PDVSA workers stayed home, closed gates to facilities and slowed gasoline and tanker deliveries. On Sunday, they answered Chavez's threats by banging pots and pans and chanting "not one step backward" at PDVSA's Caracas offices.

At least a dozen vessels were waiting for operations to resume at two of five main export terminals for crude oil and refined products - El Palito in central Venezuela and Puerto La Cruz in the east.

Created in 1976 and admired for its efficiency in a nation riddled with corruption, the multinational Petroleos de Venezuela has grown to become one of the United States' largest suppliers of oil. [End]

Employees of Petroleos de Venezuela, or PDVSA protest outside of an executive office in Caracas, Venezuela, Monday, April 8, 2002. Venezuelan President Hugo Chavez dismissed seven dissident oil executives, moving to crush a revolt against the leadership of Venezuela's state oil monopoly that threatened the production of one of the United States' top crude suppliers. (AP Photo/Fernando Llano)

[buffyt]

Sam, you are RIGHT ON!!!! Great suggestions, become less dependent on Mid East oil and help Mexico become wealthy nation! Would love to see how the Oil Cartel responds to that one if it happens!

[Willie Green]

Related threads:

Venezuela President Fires Oil Execs
US takes role in Colombia to new level
BP Cuts 500 North Sea Oil Jobs

---

U.S. Petroleum & Crude Oil Overview
(thousand barrels per day)

	1960	1965	1970	1975	1980	1985	1990	1995	2000
U.S. Crude Oil Production	7,035	7,804	9,637	8,375	8,597	8,971	7,355	6,560	5,834
U.S. Petroleum Imports	1,815	2,468	3,419	6,056	6,909	5,067	8,018	8,835	11,093
Total	8,850	10,272	13,056	14,431	15,506	14,038	15,373	15,395	16,927
Imports as % of Total	20.5	24.0	26.2	42.0	44.6	36.1	52.2	57.4	65.5

As North Sea oil production continues to decline, America's dependence on imported petroleum will shift even more towards OPEC. While drilling offshore and in ANWR may help, it would still be insufficient to dramaticly reduce our ever-increasing consumption.

The obvious solution to this dependency would be to begin construction of modern, efficient mass-transportation systems in our nation's most densely populated regions and urban areas. Electricly powered light rail, high-speed rail and maglev systems could be easily fueled by clean-coal and nuclear technology power plants.

Unfortunately, RINOs have been bought-out by Big Oil special interests. Alaskan representative Don Young, who chairs the House Committee on Transportation and Infrastructure, continues to sidetrack and delay implementation of energy efficient mass-transportation systems. A whole contingent of Nevada RINOs unite to obstruct our nation's efforts to utilize abundant nuclear power. And Dubya's own sibling, Jeb, brags about his obstruction on his re-election website:

Protecting Florida’s Coasts From Offshore Drilling – Thanks to Governor Bush’s hard work and leadership, Florida’s coastal and marine resources will continue to be free from the threat of offshore drilling. Protections secured by Governor Bush far exceed those agreed to by former President Clinton, former Interior Secretary Bruce Babbitt, and the late-Governor Lawton Chiles.

[buffyt]

I was at a local Lincoln Day Dinner where T. DeLay was guest speaker. He said there is a stack of papers sitting on Daschle's desk that Congress sent up to the Senate and Daschle won't let the Senate vote on them. They have to do with national security among other things. But Daschle is the obstructionist!

[finnman69]

Here come the $3.00/ gallon price tags this summer. This will have huge implications for the 2002 election. Watch California.

Is that better.. LOL.

I don't want to infuriate any SPELL NAZIS out there!

[backhoe]

Since my wife ( now me, since she can't drive... ) does a 50-mile commute to work, this will only hurt us.

For nearly 2 years I have lobbied those clowns in DC and Atlanta to "drill like crazy for more oil & gas, go nuclear, and slash taxes & regulations so business can do their job of employing more people...."

SamAdams76 has the right vision- when our neighbors like Mexico do better, so do we...

[Cincinatus' Wife]

The obvious solution to this dependency would be to begin construction of modern, efficient mass-transportation systems in our nation's most densely populated regions and urban areas. Electricly powered light rail, high-speed rail and maglev systems could be easily fueled by clean-coal and nuclear technology power plants.

The last time I was in England the cost of a train ticket had soared and the condition of the subway system was critical- overcrowded with service interruptions due to strikes. I think it's too easy to control the movement (or non-movement) of people when you control their mode of transportation.

[Cincinatus' Wife]

For nearly 2 years I have lobbied those clowns in DC and Atlanta to "drill like crazy for more oil & gas, go nuclear, and slash taxes & regulations so business can do their job of employing more people...."

And you've been right. Don't give up the battle!!

[rmlew]

Liberate Venezuala.

[buffyt]

Actually it didn't bother me the way you first wrote it. As long as I can read the stuff here I don't care how it is spelled. I figure we are all passionate about what we are saying and we type in a hurry. I find typos in my replies all the time, right AFTER I hit the Post button! There is a newbie named SPELL CORRECTLY who signed on at FR on March 30 and went through and posted replies anytime he found a typo, calling the typos Misspelled Words. I thought that was a new screen name and it was. He was only around for that one day. I am pretty sure I know who it is too! Have a great day and spell anyway you want to!!!! If we are irriating SPELL CORRECTLY, GOODIE!!!!! LOL

[SamAdams76]

So because the lumber companies have the equipment to harvest your timber, they own it and dictate the amount they will pay you for it?

If they paid me for the rights to harvest the timber, then they do indeed own it. I can't sign an agreement with them to harvest timber on my land and then back out of it after they have already invested in all the infrastructure to make it possible. I assume the oil companies have their agreements with Venezuela in writing.

[Willie Green]

The last time I was in England the cost of a train ticket had soared and the condition of the subway system was critical- overcrowded with service interruptions due to strikes.

The Brits are also notorious for driving on the wrong side of the road.

One of the joys of being American is that we're independent of Britain and capable of doing things our own way (better).
This includes mass-transportation.

[backhoe]

Oh, I won't- I just wish those goofballs who presume to tell all the rest of us how to live would get moving and do the obvious things we need to do to tell the rest of the world to take a hike where energy is concerned.

They are so busy jockeying for the last tiny increment of political advantage that they lose sight of how foolish they look to people like me & Emily.

[Cincinatus' Wife]

The Brits are also notorious for driving on the wrong side of the road.

They also used to be a powerful country - while driving on the left side of the road. It's the socialism that's brought her to her current state.

[Cincinatus' Wife]

They are so busy jockeying for the last tiny increment of political advantage that they lose sight of how foolish they look to people like me & Emily

Long live fly-over country!!

[Willie Green]

They also used to be a powerful country - while driving on the left side of the road. It's the socialism that's brought her to her current state.

Britain collapsed into socialism after other nations finally followed our lead and rejected British colonialism. Unlike the United States, Britain lacks the natural resources to maintain their "greatness". We would be wise to adhere to our path of sovereignty and Independence by fully utilizing the bountiful natural resources we've been blessed with rather than attempting to emulate the failed British colonial "free trade" model of dependence on foreign resources.

[Cincinatus' Wife]

We should stay militarily strong and economically viable - a marketplace for the world and a leader in technology and high tech. The socialists of the world are painfully learning the lesson you can't put everyone on the dole and expect to prosper. Now they've all bunched up together in the EU, hoping it will improve their lot. It won't. We can have cars and oil and be free all at the same time. Capitalism is the engine.

[Willie Green]

We should stay militarily strong and economically viable - a marketplace for the world and a leader in technology and high tech.

I agree.

Unfortunately it is the economic viability that is faltering. "High-tech" is moving offshore faster than its being developed, and there is no value-added in a service dominated marketplace.

And in case you haven't noticed, the modern, efficient mass-transportation systems that I advocate are "high-tech" high-speed rail and maglev. The alternative fuel sources that I advocate for these systems is also "high-tech": nuclear and clean-coal technologies. And to address the growing demand for fresh water, I've also recently begun advocating construction of nuclear desalination plants.

None of this can be described as putting "everyone on the dole".

[Cincinatus' Wife]

No but you're putting everyone on mass transit. Too much engineering of masses for my tastes. Let investors build them. Here in Houston we're being taken to the cleaners faster than we can turn around for rail. If your version is so great it should get backing. First they'll have to buy up all a lot of right-of-way and then.....

[Willie Green]

No but you're putting everyone on mass transit...
If your version is so great it should get backing. First they'll have to buy up all a lot of right-of-way and then.....

This mindless laissez-faire mantra is just as silly as the slavery reparations rhetoric.

It is impossible to name development of ANY major mode of transportation that hasn't had significant government participation in the entire history of our great nation: the original postal roads, canals and the system of locks & dams that make our inland waterways navigable, the original railroad infrastructure, the old U.S. Highway system, major airports and the air-traffic control system, coastal lighthouses and the U.S. Coast Guard, the Interstate Highway System, bridges, tunnels, etc. etc. etc.

Insistance that mass-transportation be totally implement by private sector initiative goes beyond being dangerously naive. It borders on enabling and facilitating America's enemies by continuing our ever-increasing trend of dependence on foreign energy sources.

Making false accusations that my proposal to offer fast, efficient, modern means of public transportation as an alternative choice is some kind of forceful, social engineering experiment is disingenous and specious.