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Your Gas Station

Although the Chavez plan has been mocked by conservatives who urge that Venezuela should build relations with the United States, I would argue, why should he?

By Novella Carpenter

WHEN GAS GETS this expensive, most of us go to the cheapies—the ARCOs, the Costco stations. But some people go to the Venezuelans. There's an email circulating these days that urges folks to support the socialist revolution by fueling up at CITGO, a station that carries gas made from oil originating from Venezuela.

Venezuela is an interesting place right now. President Hugo Chavez is tight with Fidel Castro, for instance, and he is beginning a policy of land distribution for the poor, much like that of Cuba's. Venezuela is a lot different than tiny, delicious-cigared Cuba, though. Namely, it is the United States' fourth-largest provider of crude oil. For perspective, according to the Department of Energy figures, Saudi Arabia is numero three.

In a move that may affect the U.S. oil supply, Chavez announced at the end of June the formation of Petrocaribe, a company devoted to providing regional oil to Venezuela's sphere of influence. Fourteen Caribbean countries, including Belize, Grenada and Jamaica, will soon receive preferential oil pricing from Venezuela. Chavez promised them 40 percent off today's per-barrel rate, and if the price went to $100, 50 percent off with a grace period of one to two years. Venezuela is going to team up with Mexico in order to guarantee 80,000 barrels per day under the new policy.

The Chavez thinking is that developing countries are at a major disadvantage should oil become scarce, because the "developed" world will take it all. An AFP article quoted Chavez as saying, "An energy crisis the world is having dumped on its head more than for any reason because of the excessive wasting of the developed north; it is irrational consumerism." Anyone that wants to argue this point just needs to look at two numbers: worldwide oil production per day: 84 million barrels; and the United States' use per day: 21 million barrels.

Although the Chavez plan has been mocked by conservatives, I would argue, why should he? As our fourth-largest provider of oil, Venezuela has the advantage. I also can't help but think that Chavez isn't such a bad guy, especially when you consider that a Petrocaribe spokesman said the deal might also include a "fund to contribute to social and economic activities to help resolve social and other problems in Caribbean countries."

So, CITGO anyone? Alas, according to the Department of Energy's Energy Information Administration's "Oil Market Primer," the global nature of the oil market makes boycotts by consumers ineffective at reducing the oil revenues of a given oil-producing country or group of countries. Similarly, an anti-boycott would work (that is, not work) for that same reason. "Because the overall consumer demand for products made from oil (like gasoline and diesel fuel) would be unchanged," the DOE's website explains, "the oil would simply be purchased by some other company."

Furthermore, there's the issue of refining. Just as that bag of giblets in a factory-processed chicken don't actually belong to that particular chicken, the refined oil isn't separated out by company at the refinery, and it is probably always a blend of what was on hand that day. Can you imagine a refinery operator saying, "Yep, today's Exxon, then we gotta wait for Shell to get theirs in"? Plus, companies often share pipelines that mix the oils anyway. When you're dealing with huge quantities of liquids, nothing can be that black and white.

Remember when I wrote a few months ago about Exxon, suggesting that people should not fill up there? Useless. A boycott will only affect market share, but because oil is a commodity, it will merely be sold to some other gas station. What's a radical to do, then? From the mouths of the DOE: "The second way consumers impact the market is by reducing gasoline consumption. If enough people reduce driving or switch to more energy-efficient vehicles, gasoline demand would decline and prices would be dampened." Yay, like a soggy blanket! Not likely, though, is it?

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From the July 20-26, 2005 issue of Metro, Silicon Valley's Weekly Newspaper.

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