(CNSNews.com) – As the slump in oil prices hurts producers like Venezuela, OPEC has moved up an emergency meeting where a sizeable production cut looks likely – part of a cartel bid to push prices back up.
Critics of Venezuelan President Hugo Chavez, meanwhile, are urging American consumers to take the opportunity to inflict further pain on the U.S.-baiting leftist by switching from gas stations selling Venezuelan product.
Oil demand has been dropping as a result of the global economic slowdown, and prices have dropped by more than half since last July’s record highs of almost $150 a barrel.
Earlier this month, OPEC announced an emergency meeting on Nov. 18 to discuss the impact of the financial crisis on the oil market, but after further drops it brought the meeting forward to Friday, Oct. 24, in Vienna.
OPEC said in a statement it remained determined “to ensure that oil market fundamentals are kept in balance and market stability is maintained.”
Venezuela, Iran and Qatar are among the OPEC members pushing for an output cut. Qatar’s oil minister predicted a one-million-barrels-per-day (bpd) cut, while his Algerian counterpart and current OPEC president, Chakib Khelil, was quoted Saturday as saying the cut could be as much as two million bpd.
A production cut would be the first in two years for OPEC, whose 13 members supply more than 40 percent of the world’s oil. Its last cut, of 500,000 bpd, was announced in Dec. 2006 and later reversed.
Speculation of an imminent output cut saw prices rise slightly early Monday, with crude for November delivery rising above $72.
Countries such as Venezuela are heavily reliant on energy sales.
According to CIA figures, oil revenues account for some 90 percent of Venezuela’s export earnings, more than 50 percent of its federal budget revenues, and about 30 percent of its GDP. Venezuela has reserves estimated at 79.1 billion barrels, produces 2.3 million bpd and exports 2.2 million bpd.
While pushing for an OPEC production cut, Chavez has also been putting a brave face on the price slump, saying during a cabinet meeting Friday that Venezuela had sufficient resources to fund social and investment projects scheduled for 2009.
“This is not to claim victory, but we have the capacity to endure this crisis, not only to weather the storm, but keep investing,” Venezuela’s El Universal newspaper quoted him as telling the ministers.
According to the Department of Energy’s Energy Information Agency (EIA), Venezuela was America’s fourth biggest supplier during 2007, after Canada, Saudi Arabia and Mexico. Last July, the U.S. imported 1.3 million bpd from Venezuela, more than half of Venezuela’s total exports.
’Let’s help him out’
Some critics of Chavez are suggesting that this is a good time to increase the pressure on Venezuela.
The Washington-based Jewish Institute for National Security Affairs (Jinsa) noted in a report that high gas prices have prompted Americans to cut back significantly on driving.
(Federal Highway Administration figures showed that Americans drove 53.2 billion miles less between Nov. 2007 and Aug. 2008 than they did over the same period a year earlier.)
As prices drop, Jinsa said, “we now run the risk of returning to our wasteful ways.” Doing so “would be a mistake for economic, ecological and national security reasons.”
“Whatever the price per gallon, filling up provides Iran, Venezuela, Russia, and Saudi Arabia with the funds to export revolution and terrorism, or to bend the political will of others to their liking,” Jinsa said. “Now we have an opportunity for push back and we should take it.”
Quoting wire service reports indicating that Chavez is facing serious financial difficulties because of the dropping prices, Jinsa suggested, “Let’s help him out.”
It urged Americans to stop buying gas from CITGO gas stations – “not because Venezuela is worse than Saudi Arabia, but because only with CITGO do we know where all the gas comes from.”
“Let’s see if we can maintain our newly diminished driving habits and shift our purchases away from Venezuelan gas in the interest of sinking a pro-Iranian, anti-American dictator in our own hemisphere.”
CITGO is owned by a Houston, Texas-based, wholly-owned subsidiary of Venezuela’s national oil company, Petroleos de Venezuela SA (PDVSA).
‘We need each other’
Although Chavez has on occasion threatened to cut oil exports to the reviled U.S. “empire,” he appeared unnerved last week by statements by the U.S. presidential contenders about ending imports of Venezuelan oil.
During the final presidential debate, Sen. John McCain said he thought the U.S. could “for all intents and purposes, eliminate our dependence on Middle Eastern oil and Venezuelan oil.”
Sen. Barack Obama said he thought 10 years was “about a realistic timeframe” to reduce dependence to a point where “we no longer have to import oil from the Middle East or Venezuela.”
The day after the debate, Chavez said in televised remarks that the U.S. had “no way and no need to stop buying our oil.”
“What we need to do is talk,” he said in uncharacteristically conciliatory comments. “We need each other.”
Calls to boycott CITGO are not new. The campaign got a boost after Chavez called President Bush “the devil” at the U.N. General Assembly in 2006. When the 7-Eleven Inc. shortly thereafter dropped CITGO as its supplier, some claimed a victory – although 7-Eleven had announced the plan before the U.N. speech.
Attempts to get comment from CITGO for this story were unsuccessful. In an Oct. 2006 statement, the company said boycott calls “run counter to the principles of a free-market economy,” and would hurt Americans.
“CITGO has approximately 4,000 employees in the United States and, through a network of more than 13,000 independently owned retail locations, CITGO indirectly employs roughly another 100,000 people,” it said.
CITGO said the fact CITGO’s crude oil supply is sourced in the Western Hemisphere was “precisely one of our key strengths.”
“Most of our competitors, on the other hand, buy their oil from countries where ongoing conflicts pose a tangible threat to security of supply.”
It also pointed to various social responsibility projects, including one to provide discounted heating oil to low-income communities in the U.S. over winter.
While CITGO is unquestionably owned by Venezuela’s state-run PDVSA, the products offered by other major oil companies may also include some oil originating from Venezuelan.
The EIA says it cannot definitively say where gasoline at a given gas station originated.
It points out that gasoline from different refineries is often combined for shipment by pipeline, and says companies owning service stations in the same area may be purchasing gasoline at the same bulk terminal.
Amid an ongoing multi-billion dollar legal dispute, PDVSA early this year said it was stopping all exports to ExxonMobil Corp.