Venezuelan president Hugo Chavez
has been irritating the US for a long time, making statements threatening to
deny his oil to US markets, thus threatening the US economy with higher
gasoline prices. Chavez's has also made anti-US political statements while at
the same the US has made statements of disdain for Venezuela's lack of
democracy, to say the least.
Venezuelan oil is
important to the US economy, partly because of its supply volume and proximity
to the US. Venezuelan oil tankers can make a round trip in 7 days, as opposed
to oil tankers from the Persian Gulf, which require a 21 day turn around. While
the distance factor appears to be significant for supply, the number of ships
in service compensates for that factor. The distance factor does, however,
allow for greater flexibility in the supply chain, which is not only
advantageous for the US, but for Venezuela as well as they can adjust shipment
schedules more easily based on demand, but that also allows for quicker
economic effects on the US economy if Hugo Chavez chooses to deny the US its
oil.
Hugo Chavez's threats to cut off his oil supply
to the US now appears to just be saber rattling. While the US depends on this
foreign oil supply, Venezuela depends on the US purchasing its oil for its
economy as well, thus interdependency, but he US has shown it can run without
Venezuelan oil, as proven by the Venezuelan oil strike a few years ago.
In the mean time, Venezuela's wholly-owned oil
company Citgo has just started a PR campaign featuring television commercials
showing happy drivers and featuring the Three Dog Night song "On the road to
Shambala" which is clearly designed to make people feel good about Citgo. The
song starts with the lyrics "Wash away my troubles, wash away my pain, With the
rain in Shambala. Wash away my sorrow, wash away my shame, with the rain in
Shambala (chorus). Everyone is helpful, everyone is kind, on the road to
Shambala. Everyone is lucky, everyone is so kind, on the road to Shambala."
Venezuela has chosen this upbeat utopian song to
obviously make people happy, thus change the negative feeling Americans have
toward Citgo products via Venezuela. Could this be a reaction to overcome an
apprehension or boycott of Citgo gasoline? Surely, but more importantly, it
shows that Hugo Chavez has blinked - he knows he can not afford he loss of US
oil revenues, and that he needs US citizens to buy gasoline from his
wholly-owned company Citgo gas stations because he needs the oil revenue, and
possibly a boost for his own ego as well. |
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