Hugo Chavez Flunks Economics
In this article about Hugo Chavez pledging to offer oil to poor Americans at a deeply discounted price comes this little gem.
Chavez is seen by some as the biggest problem to emerge in Latin America since his hero, Fidel Castro, seized power nearly a half century ago. And it all has to do with oil and Chavez’s repeated threats to cut off the U.S. from Venezuela’s oil supply.
The U.S. gets more than 1 million barrels of oil a day from Venezuela.
Hugo, buddy, oil is traded on a global market. As such, putting an embargo on the U.S. all by your lonesome would do practically nothing since the U.S. would go to the global market and buy 1 million barrels there while somebody else bought the 1 million barrels we no longer bought from you. Now maybe if you just stopped producing those 1 million barrels the price might go up a bit. If you could get OPEC to follow suit then things could get pretty bad…but at the same time you’d be hurting your own country since you’d be losing out on that revenue as well.