Reply #56: Not according to the Council on Foreign Relations. [View All]

[mbperrin]

http://www.cfr.org/publication/12089/venezuelas_oilbased_economy.html

* China. Venezuelan oil exports to China have gone up to 150,000 barrels per day in 2006 from the 12,300 barrels per day being delivered in 2004 and are expected to increase to 500,000 barrels per day within five years. As part of agreements signed in 2005, China is investing $2 billion in oil-related exploration and development projects in Venezuela’s Zumano region and Orinoco oil belt. China is also investing $9 billion in transportation infrastructure as well as telecom, mining, and the agricultural industry.
* Iran. Venezuela and Iran made agreements in August 2006 to build joint oil refineries in Indonesia, Syria, and Venezuela. In addition, Iran’s state-owned oil company Petropars has begun to invest in oil exploration and development in the Orinoco belt.
* India. Venezuela agreed in April 2006 to begin sending two million barrels per month to India, according to India Daily. Both countries are jointly exploring for heavy crude oil in India.

In addition, your demand analysis assumes steady demand, not growth. Since China's economy is growing at 11% and more per year and energy demands even faster, the idea that supply can simply be redirected here and there is naive. Much more energy is required and when energy is shifted away from one market, it becomes more expensive for that market to replace it. If it could be done at the same price, no shift would have occurred in the first place.

Product follows price, and others are willing to pay more for product. The US pays more indirectly, but Iran nor Venezuela receive the extra trillions we expend in military overhead to seize assets elsewhere. US companies get the money for military items, and the producers are expected to take less, not more, for their product.

It's the Mafia thing. If they steal ALL the DVD players, and sell them off the truck, the DVD factories will shut down. They have got to receive some of the revenue themselves. Taking profit from actual producers and diverting it to thieves is what a kleptocracy is all about. But as with all unsuccessful parasites, they kill their host and need to find another.