Will Hugo Chavez cut off oil to the U.S.?

The Associated Press

Hugo Chavez is making noise. Again.

Featured Topic | Posted 29 weeks 5 days ago

Will Hugo Chavez cut off oil to the U.S.?

Hugo Chavez is threatening to take his ball and go home. In this case, though, the ball is oil -- 12 percent of all U.S. oil imports come from Venezuela. Chavez is angered because a British court has frozen $12 billion in Venezuelan assets as Exxon Mobil as it challenges the nationalization of a multibillion dollar oil project by Chavez's government.

Will Chavez make good on his threat? Why does he keep coming into conflict with the U.S. and its allies?

Ben likes: Big Oil strikes back at petrotyrants

Investors Business Daily

Exxon Mobil, a $440 billion company with operations across the globe, has for decades dealt with crazy, corrupt governments. It routinely does business with the likes of Chad, Russia and Angola and knows all about them. But it's never run into a partner as outrageously bad as Venezuela. That's why its unprecedented move to take Venezuela all the way to international courts over Chavez's seizure of its assets is a big blow from the private sector against a dictatorship that otherwise seems to hold all the cards.

Exxon sends the message that playing within the rule of law is a far better means to succeed, win and play with the big boys than to break contracts, steal assets and violate internationally recognized norms, as exemplified in Chavez's Venezuela.

Joel likes: The talented Mr. Chavez

Franklin Foer/The Atlantic

While the United States relies on Venezuelan oil, Venezuela is even more dependent on the American market. More than half of Venezuela’s oil exports head north toward the Gulf of Mexico—some 1.5 million barrels a day. Over the course of Chávez’s presidency, Venezuela has received billions of dollars from America in oil purchases.

Ultimately, not even a lover of Quixote dares invest too much hope (or cash) in preparing for a break with the American market. Nature has tied Chávez’s arms. Venezuelan crude comes from the earth in a particular viscous form that requires specialized refineries, the type that exists in Louisiana and Texas, not China or India. The country’s fleet of tankers is geared toward transporting this oil to the Gulf of Mexico, and can’t be reversioned for longer hauls. What’s more, Venezuela doesn’t just export its oil to the United States; it actually sells the stuff there in the 14,000 Citgo stations that the state oil company owns.