DANNI
Er....I believe Venezuela is part of OPEC and as such is cutting production to boost prices while demand is less. Not to say that Chavez is probably not also quite incompetent but why would his cut in production not be compared to the other OPEC states???
I've been following the oil/oil services stocks real closely lately and reading a lot about them. Stock prices are priced way below value with a number of them due to all the craziness in the market. I was looking at Brazil's Petrobras oil but buying stock with them is a little dicey right now because Brazil is toying around with nationalizing their oil and kicking out foreign oil companies whom they had formerly partnered with. But Brazil still needs the American oil service companies to extract the oil from the huge Tupi oil field off shore as they do not have the needed expertise themselves so they will have to partner with American oil service companies in some form or another. They already have contracts locked up.
Anyway, Chavez cuts cheaper oil deals with countries other than ours and is only raising the cost of oil with the U.S. because he's irritated about sanctions we have put on Venezuela due to the political differences Chavez has with Bush.
I also doubt that no matter what OPEC tells us for now they too will not let oil get much lower per barrel either. I believe OPEC meets again this November and God knows what state the world's economy will be in by then.
Here's a short article about Venezuela and Iran's oil production in contrast to OPEC.
But like I said, OPEC is not going to let oil get much lower either. I can't see OPEC allowing oil to get lower than $80 a barrel at the minimum. Right now OPEC isn't making any waves in order to not cause problems with our own upcoming election in November. High oil prices -- and high costs at your local gas station to fill up your car -- does not help the Republicans at election time. But after the elections, all bets are off.
On one side are Iran and Venezuela, which want to squeeze as much money as possible out of the United States and other large oil consumers. On the other side of the fight is Saudi Arabia, with strong political ties to the United States and President Bush's family.
In the coming days, expect Washington politicians to lash out against Venezuela and Iran for trying to reduce to flow of oil.
"You don't get on the US's good side for calling for oil production cutbacks but Venezuela and Iran were scarcely on America's good side to begin with," said Jerry Paylor, a senior fellow at the Cato Institute, a Washington thinktank. "You'll probably see plenty of wailing and gnashing of teeth over this because it's in everyone's interest to find easy scapegoats and there's no easier scapegoat in American politics than OPEC."
However, Paylor warns that there is absolutely no correlation between OPEC declarations about production cutbacks and actual OPEC behavior. In fact, most nations are producing as much oil as they can.
