Tuesday, 12 June 2012

Oil addiction running amok

The current president of PDVSA, Venezuela's state petroleum company, asked the Golf States to reduce oil production: oil prices are "too low". And I thought: how was it about the "fair price"?

I checked it out.

Hugo Chávez declared in 2006 the fair price for oil shouldn't be under 60 dollars a barrel. In 2007 he said the fair price should be between 90 and 100 dollars. The next year the military president thought the price to pay should be around 100 dollars. In 2009, he declared "the fair price for oil is 60 dollars a barrel". The next year, that very just of all prices had to be at not less than 80 dollars. In 2011 the level was 100 dollars.

Here I plotted OPEC's average price (in red) against Hugo I's "Fair Price" (in blue). Mind: I didn't select Hugo's "average" fair price, but the first "precio justo" of his for any given year that I could find on a very quick search. The average price for Venezuela's petroleum this year is around $114 but the current price is actually around the "fair price".

What does this show us, ladies and gentlemen?

It's all the opposite to sustainable development. I wouldn't even call it unsustainable development. The current government is running a rat race.

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