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.

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Steve Verdon
About Steve Verdon
Steve has a B.A. in Economics from the University of California, Los Angeles and attended graduate school at The George Washington University, leaving school shortly before staring work on his dissertation when his first child was born. He works in the energy industry and prior to that worked at the Bureau of Labor Statistics in the Division of Price Index and Number Research. He joined the staff at OTB in November 2004.

Comments

  1. BigFire says:

    There’s also the matter of who’s going to buy his oil. Venezualan crude oil is of heavy sulfur that requires more expensive refinement. The reason Venezuala sold their oil to United State is that we have the closest refinery (The Gulf Coast Refineries) that’s close enough to the source to make the end price look good. One of the major reason for the recent (past 3 years) rise of fuel is the increase in demand, and the lack of shipping & refinery capacity to carry the fuel.

    Shipping it half way around the world cost more, and hits his own bottom line. If he decided to stop selling them to United State, it’s his own choice. But he’ll be getting less money, and it won’t even make much of a difference to the Great Satan.

  2. Rick DeMent says:

    Actually we would have the same problems as hauling oil from farther away increases costs slightly. Venezuela is the closest Exporting country other then Canada but we already get as much as we can from them.

    While it’s true that it won’t cause prince increases that will make much of a difference, it will cause some increase in the transportation of the oil that will replace it. Likely from the middle east.

  3. Mark says:

    Venezuela is the closest Exporting country other then Canada

    Don’t we get oil from Mexico too?

  4. Ray says:

    To me, Chavez threatening to cut off oil sales to America is like all those that threatened to leave America if President Bush won reelection, all talk no action.

  5. Christopher says:

    We have to forgive Chavez the Commie for being stupid.

    Speaking of which, hey liberals! How does it feel to be on the same side as a thug communist? LOL! What’s he old saying? “Politics makes odd bedfellows”. But seeing as how democrats and communists share so many of the same beliefs-and I’m not talking just about stupidity or tyranny-maybe it is not so odd after all.

  6. machs says:

    Chavez/Glover to open chain of Harlem ‘Jiggy Lube’ stations!

  7. TJIT says:

    Notice chavez is taking money from people who are really poor in Venezuela to subsidize the price of oil sold to comparably much richer US citizens.

    For some reason the leftists cheer this action.

  8. Rich S. says:

    The comments by this loony toons (Chavez) may do more good to the politics in this country than anything else. Even those that have voiced their hatred for our President in the past have come to his defense. This is our president and only we have to right in this country to call him names. If chavez wants to talk like a spoiled child that can’t get his way. Then let him do it on his own soil.

  9. Rick DeMent says:

    Don’t we get oil from Mexico too?

    Yes, but like Canada we are getting all we can from them.

  10. RJN says:

    I think we get refined product from Venezuela, which is a big deal. Isn’t there a shortage of refineries in the U.S.?