Hugo Chavez wants $100 oil! "I've always said prices were headed straight to $100 per barrel. We should prepare ourselves for these prices of one hundred dollars." Thus spoke Hugo in a televised address this Saturday past, to an assembled coterie of Caribbean leaders in Caracas. And this before flying off to London to preach the virtues of Venezuela's "Bolivarian Revolution" of resource nationalization to sympathetic MPs, trade unionists and activists. According to Reuters, Chavez was welcomed to London by its mayor Ken Livingstone who described George W. Bush's administration as a "gangster regime". His words for Chavez rang differently "We salute you Mr. President. Londoners stand with you, not with the oil companies and the oligarchs".
No so fast, Mayor Livingstone, those oil companies and oligarch's stick together. The price of oil is thicker than either blood or water. $100/bbl oil is music to the oil patch's ears. If Hugo can bring it to pass for them, they'll love him for it and Ken Livingstone can rant and rave about oil companies and oligarchs all he wants. Just bring on that "c-note".
And leading the cheers, frantically waving pom-poms will be none other than our own subsidiary of the American Petroleum Institute, the U.S. Department of Energy. Created to look after the nation's energy interests it has descended to rationalizing oil price extortion and to becoming the champion of a manipulated market that is costing American and international consumers literally trillions over the years.
In the past decade the U.S. Department of Energy has witnessed an 800 percent increase in the price of oil, barely demurring nor signaling its displeasure. Quite to the contrary, it has willfully reinforced the fiction that we are dealing with a free and unfettered market. It sees and hears no evil. It takes OPEC pronouncements as gospel and goes on to validate the fiction of their purported "good intentions".
The first days of August 2007, with oil prices reaching new contract all time highs just short of $79 a barrel, there was neither a hue nor cry from the very department of our government charged with maintaining a sane balance of the oil and energy markets. Where were the pronouncements of outrage that the cartel and the oil industry had pushed prices to inexcusable levels?
But we needn't have held our collective breath. In case you have lost sight of current realities, this is more the "Oil Industry" Department of Energy than the "U.S." Department of Energy. Mr. Sam Bodman our Secretary of Energy stirred himself to lambaste OPEC in no uncertain terms. "I'm concerned that we probably are going to need more oil and I'm hopeful that the OPEC ministers ... will agree to that". He continued that -- "current supply is a little short of what we'd like it to be". There! Take that you OPEC bullies!
But what was he really saying? Let me conjecture, "Dear Ministers of OPEC, you have programmed and purposefully cut back shipments of oil by 1.7 milliom bbls/day so far this year. You have thereby been extraordinarily successful in raising prices by over fifty percent in six months time, from $50/bbl in January to over $75/bbl by the end of July. Please understand, I am embarrassed to bring this up, knowing you have our, and certainly the oil industry's best interests at heart. For appearances I have to say something. Not, of course, that a fifty percent increase in the price of such a core commodity as oil over a short six month period is outrageous, but simply as I have been quoted, that -- 'current supply is a little short of what we would like it to be'. Sort of like saying the price has gotten a bit high too fast, so let's slow it down a touch. Now, please understand, I'm not saying the price is too high, but I have all these gas consumers that I must deal with who feel they are paying through the nose, at the end of the hose. Ha! Get it? Nose, Hose? Oh well."
It should now become clear to all, given this ludicrous Mutt and Jeff routine, that it was preordained for Hugo to push for, and ultimately to expect to achieve $100/bbl oil.
To show he really means business, Secretary Bodman said "I expect I will be talking with oil ministers" before the next OPEC meeting on September 11. When asked specifically whether that meant also speaking to Saudi Arabia's oil minister, he replied, and I quote verbatim, "It depends on what everybody's schedule is". There we have it. We're in good hands with our Energy Department.