I don't think you have to be a genius or an economist to grasp this but, apparently, few journalists and historians and politicians abroad grasp it: oil prices are still at a record high this year. The price drop during the last few months could so far be considered as a local minimum. EFE and others keep repeating Chávez has had to deal with oil price drops...but again: they are just local minima. Oil prices - I repeat - oil prices haven't been as high as they are today for several decades now. This doesn't have to do with an anti-imperialist strategy, with "just deciding to sell oil at a higher price and not like the compradores were doing". It has to do with supply and demand. It has to do with China's gigantic evolution and to an extent that of many other countries developing and demanding more oil.
Chávez's regime is still receiving much more money than what several previous governments got - inflation considered. Please, put the price drop of the last few months in context.
Below you see OPEC's average price evolution. Venezuela's crude oil is generally cheaper, but the price evolution is very similar: ups and downs go more or less like here
...That is one question I have been meaning to ask you Kepler. Why is Venezuela's oil cheaper than oil from the middle east?
ReplyDeleteHi, Stephanie. Generally every country has different oil types, some heavier than others. If they are heavier, with components that need extra processing for extraction, they are more costly. The OPEC basket price that I used to plot this chart is composed of the prices of different crude types from the state members. Venezuela tends to have - as a whole - heavier crude oil than Saudi Arabia, for instance. We have Santa Barbara, which is rather light, but also tar sands, which are extremely heavy (and create greater pollutions, Canadians know a bit about this as well).
DeleteThe Orinoco Belt (at the Orinoco Basin) is chock-a-block with oil, but it is largely tar sand.
http://en.wikipedia.org/wiki/Orinoco_tar_sands#Development
I don't know the average difference, I am asking around.
The final price and money Venezuela gets depends on so many factors even beyond the marketing/expectation/speculation factors: fleet cost to place of delivery, places that can process said crude and so on.
But in any case: the government is still getting many many times more than it was getting when Chávez was new in power.
Unfortunately, some journalists and the like seem to look just at the development of the last couple of months and run to draw silly conclusions.