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Posts tagged “Hugo Chavez”

By Robert Rapier on Sep 24, 2010 with 78 responses

How to Run an Oil Industry into the Ground

Hugo Chavez is putting on a clinic in Venezuela. The theme is “How to Destroy a Domestic Oil Industry.” I have warned for years that this would be the end result of Chavez’s actions. As I wrote in 2007: So, can Chavez under-invest in the industry while diverting money to his pet causes? He can for a while, but you can see the results. Despite having enormous oil reserves, he and his cronies are running Venezuela’s oil industry right into the ground. His generosity to the poor has only been possible because he had a goose that laid golden eggs because they constantly reinvested money back into the business. Once he kills the goose, where is he going to get… Continue»

By Robert Rapier on Jan 15, 2010 with no responses

Events in Venezuela

I have seen a number of interesting stories on Venezuela this week. First was: The Chávez Spiral With petroleum prices down around $71 a barrel from a high of $147 the Venezuelan government is struggling to make up for the revenue shortfall to save programs that placate the poor by providing cheap food, fuel and other government giveaways. Making matters worse, the once mighty Venezuelan petroleum industry has been laid low by politicization, corruption and mismanagement; rather than producing 3.3 million barrels per day, industry analysts believe the production is closer to 2.3 million. Instead of maximizing profits by producing its quota, Venezuela’s state-run oil fields are either underperforming or have collapsed altogether. I have warned numerous times about the… Continue»

By Robert Rapier on Sep 2, 2009 with no responses

Is Venezuela’s Stagflation the Beginning of the End for Chavez?

I am just finishing up Biofuel Contenders, and should have that up later today or first thing tomorrow. Until then, a topical post from the latest from Money Morning, which as I previously explained will be featured here whenever they have relevant material to offer. As always, normal caveats apply: I am not an investment advisor. I don’t endorse any specific stocks mentioned in the following story nor the ad at the end of the story. —————————————— Is Venezuela’s Stagflation the Beginning of the End for Chavez? By Jason Simpkins Managing Editor – Money Morning It wasn’t long ago that Venezuelan President Hugo Chavez’s decision to nationalize state oil company Petroleos de Venezuela SA (PDVSA) resulted in a failed coup… Continue»

By Robert Rapier on May 16, 2009 with no responses

Venezuela’s Slide Continues

At this point, you have to wonder who in their right mind will ever do business in Venezuela again as long as Chavez is in power. The risk that Chavez will steal your property is simply too great. During his administration, Chavez has seized phone companies, electric utilities, private real estate (just this week he ordered seizure of a private shopping mall), oil field investments, mines, steel plants, food processing plants, farms, (shades of Mugabe) and cement plants – to name a few. Now this week he has stolen the assets of oil field services companies: Venezuela Seen Paying Price for Chavez Expropriation of Oil Contractors In the wake of the seizure of foreign and domestic oil service companies and… Continue»

By Robert Rapier on Jan 15, 2009 with no responses

Chavez Back Pedals

Now this is pretty funny: Chávez Lets West Make Oil Bids as Prices Plunge CARACAS, Venezuela — President Hugo Chávez, buffeted by falling oil prices that threaten to damage his efforts to establish a Socialist-inspired state, is quietly courting Western oil companies once again. Until recently, Mr. Chávez had pushed foreign oil companies here into a corner by nationalizing their oil fields, raiding their offices with tax authorities and imposing a series of royalties increases. But faced with the plunge in prices and a decline in domestic production, senior officials have begun soliciting bids from some of the largest Western oil companies in recent weeks — including Chevron, Royal Dutch/Shell and Total of France — promising them access to some… Continue»

By Robert Rapier on Jan 7, 2009 with no responses

I’m in the Wrong Business

Update: As Maury pointed out in the comments, Chavez has reconsidered: Venezuelan-owned Citgo Petroleum, which had earlier indicated it might end a home heating oil assistance program for low-income Americans, yesterday said it had decided to continue the program. Joseph P. Kennedy II, chairman of Citizens Energy, said yesterday that the renewal of the program was evidence of Venezuelan President Hugo Chávez’s “genuine concern for the most vulnerable, regardless of where they may live.” Does that mean that he was no longer concerned for those people when he cancelled the program? With comments like that, Joe Kennedy’s $400,000 salary won’t be in jeopardy. —————————— You may have seen the recent announcement that Hugo Chavez is cutting off the free heating… Continue»

By Robert Rapier on Aug 29, 2008 with no responses

Palin a Friend of Big Oil?

Count me among those stunned by McCain’s pick for his VP candidate. It neutralizes the strongest argument he had against Obama: Not enough experience. Never again can he utter these words. Further, I can’t comprehend her as president (and with McCain’s age, I think we would have a fair chance of seeing that happen). I think the job is over her head, and I have witnessed the carnage several times when people step into a job over their heads. Imagine letting a first year medical school student do your heart transplant, and you start to get the picture. I have also heard several people today refer to her as a friend of Big Oil. Ha! She has been called the… Continue»

By Robert Rapier on May 23, 2008 with 1 response

Nationalize the Oil Industry?

In a post I wrote just over a year ago – Peak Oil: End of the World? – I posed the following: If you think the public is outraged now, wait until gas is $10 a gallon, people are suffering as a result, the economy is tanking, and ExxonMobil posts the first ever $100 billion annual profit. The vast majority of the country will blame Big Oil for their woes, and they will resent that Big Oil is profiting from it. How will the public react? How will the government react? No doubt there will be legislation designed to combat the problem, but of what form? Will the government institute rationing? Will they attempt to nationalize the oil companies? This… Continue»

By Robert Rapier on Apr 2, 2008 with no responses

Attempting the Impossible

I ran across the following today: Our view on gasoline prices: With crude at $100 a barrel, Big Oil needs no tax breaks It’s difficult — make that impossible — to justify taxpayer subsidies for an industry whose top five companies made $123 billion in profits last year. Oil at $100 a barrel ought to be plenty of incentive to drill without extra encouragement from taxpayers. OK, sounds like a challenge. I will accept. First off, does it matter how much capital is being invested to make those returns? What if the required investments are 10 times that $123 billion? What if another industry – like say Hollywood studios – makes much higher profit margins, yet qualifies for exactly the… Continue»

By Robert Rapier on Mar 26, 2008 with no responses

Newsflash: Chavez to Increase Oil Taxes Again

When ExxonMobil and ConocoPhillips walked out of Venezuela last year instead of accepting radical changes to their previously agreed upon contracts, I think they could see the handwriting on the wall. As long as Chavez has influence down there, oil companies are not going to be allowed to consistently make money. If oil prices are up, he is going to demand a bigger cut. But if oil prices are down, he isn’t likely to reduce tax rates. So I think XOM and COP viewed the situation as high risk, low reward, and decided to exit instead of continue to play games with Chavez. It should come as no big surprise to the companies who decided to stay – Chevron, BP,… Continue»