Before I go off on my rant we have a smattering of articles about oil. First up we have Vancouver Sun telling us that the Biden administration shows no sign of reversing course on his Keystone pipeline decision. It would be bringing 830,000 bpd (barrels per day) of oil from Alberta, Canada to refineries in Texas and Louisiana. His solution to high oil prices is loosening restrictions on Venezuela, a gas tax holiday, and releasing oil from the strategic petroleum reserve. His plan doesn’t do much for solving the problem but it sits well with his political base which supports his “Green New Deal” style initiatives.
Canadian oil executives were “flabbergasted and astonished” that the US would seek help from a sworn enemy of the US over help from an ally. Venezuela oil is extra heavy, “dirty” if you will. It ranks far worse than Canadian oil and Canada has plans to decarbonize oil unlike Venezuela which has no such plans.Canada could increase oil exports to the US by 200,000 – 300,000 bpd but Biden’s goal of cutting oil supply, long-term, is creating problems.
Next up we have Energy Intelligence telling us that US National Security Advisor, Jake Sullivan, says Washington will only consider further relaxing energy-related sanctions on Venezuela if progress is made in political negotiations. Isn’t that what they’ve been saying since the Biden administration official’s last visit to Caracas in March? (Remember, that same group is down there talking to Maduro again)
Then we have Oilprice.com telling us that Brazilian oil and gas production, which currently sits at about 3.86 million bpd, is #1 in Latin America. Venezuela’s production last year ranged between 600,000 to 850,000 bpd. Why isn’t Biden talking to these guys? Could it be that Brazil’s oil industry is heavily involved with international oil majors like Exxon Mobil?
Then we have the Jamaica Gleaner telling us that the Prime Minister of The Bahamas wants sanctions lifted on Venezuelan oil to lower fuel prices.He called for Caricom (Caribbean Island Nations) leaders to approach Caracas for assistance.This guy has no clue. The old days of Petro Caribe, The Chavista plan providing 85,000 – 100,000 bpd to island nations, as well as special financing, are long gone. They don’t have the oil to give them and they’re, for all intents and purposes, broke so special financing isn’t feasible.
Then we have Newsweek telling us that “Iran And Venezuela Could Help Biden’s Gas Crisis If He Lifts US Sanctions”. This guy is as clueless as The Bahamas Prime Minister. As we’ve detailed before, Venezuela has no spare production capacity and to increase it would take years and, of course, billions and billions of dollars, which Venezuela doesn’t have.
Then we have Reuters telling us that PDVSA (Venezuela government-owned oil company) suspended gasoline production at it’s second largest refinery due to a power outage. This happens all the time. The Venezuela power grid still hasn’t recovered from the massive blackouts of 2019 and won’t be recovering any time soon. There are also frequent production stoppages due to fires, explosions, leaks, etc. as Venezuela’s dilapidated oil infrastructure collapses. Do any of these people that think we can get oil from Venezuela if we lift sanctions know this stuff?
Then we have BNN Bloomberg with an article that starts out reporting on Venezuela’s GDP growth, which it sees as about 8.3% for 2022. (FYI, this is after 8 consecutive years of recession) Then they turn to oil production (approximately 95% of Venezuela’s “legal” revenue). They say Venezuela oil production appears to be leveling off at about 700,000 bpd. New investment provided by sanctions relief could add possibly another 300,000 bpd.(They are still 10 years and $10 billion a year of new investment to reach pre- Maduro production levels of over 3 million bpd.
So, my question is, “What the hell’s going on out there?” (Vince Lombardi) Why does anyone think Venezuela could or should play any part in the oil need of the US? The collapse of PDVSA began in the early Hugo Chavez years when he fired 18,000 PDVSA professional oil workers and replaced them with 40,000 Chavista loyalists that knew nothing about the oil business. At the time, PDVSA was the envy of the oil producing world and one of the most profitable companies in the world. Besides the now bloated payroll, the Chavistas chased away the remaining professionals by promoting the loyalists so the professionals still there soon realized they had no future at PDVSA.
The Chavistas in charge paid no attention to maintenance of the infrastructure for years (oil is a highly maintenance intensive and capital intensive business) as they siphoned off all the profits from years of record high oil prices. They put PDVSA into a death spiral with all the international oil majors pulling out of Venezuela and even the Chinese refused to enter into new joint ventures with the Chavistas. Their oil business is a shell of it’s former self. But most people still have this romanticized notion that Venezuela is still a major player in the global oil business… THEY”RE NOT!! They’re not even a minor player. Their extra heavy crude isn’t able to be refined by many countries without significant refinery upgrades so they have a limited market. It’s also the least “environmentally friendly” oil in the world. Their production is in such a shambles that after they ship oil to China (for free) in return for past, ill advised and unnecessary loans, and to Cuba (for free) in return for Cuban doctors and security officers, and whatever they have to provide to Russia (for free) from past oil for arms deals, there isn’t much left. So little that they have had a fuel crisis for years and can’t supply their own domestic needs (which, by the way, is in violation of the OPEC charter).
So, you have a corrupt regime that, for all intents and purposes, has no spare capacity of oil to offer anyone and even if they did it’s the most environmentally unsound oil on the planet. This corrupt regime is also currently under investigation by the ICC (International Criminal Court) for Human Rights violations and possible crimes against humanity as they starve their population and force over 6 million people (and counting) to flee 21st Century Bolivarian Socialism. All these things are easily overlooked by the Biden administration, their “Green New Deal” political base, and a compliant media, led by the New York Times, that also chooses to easily overlook all these facts. I guess we shouldn’t be surprised as they chose to overlook the atrocities committed by Nazi Germany, which killed millions, and The regime of Joseph Stalin, which killed millions, and Chairman Mao, whose “Great Leap Forward” killed millions, all whitewashed by the New York Times and the establishment media…how soon we forget. There is no sound reason in the world to be talking to the Maduro regime about any kind of sanctions relief for oil production. It’s morally and ethically unsound. It’s environmentally unsound. Its rationally unsound. It does, however make sense to the Biden administration, their supporters, and much of the international community as they pursue their ideological and political agenda. Facts are easily overlooked.
And a quick one from the National Review. Iran and Venezuela sanctions are not being respected or the violation even hidden as evidenced by the recent arrival of an Iran tanker in Venezuela transporting 1 million barrels of light crude. For sanctions to work they must be monitored, applied, coordinated, and enforced.US policy makers could have adjusted sanctions to allow oil for gas swaps with PDVSA but they failed to do so thereby creating an opportunity for Iran to increase ties with Venezuela (not that Maduro really needed a reason). It probably would have happened anyway but we didn’t have to help them do it.
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