Venezuela Plans to Split State Oil Company

Mark Jones markjones011 at
Wed Jan 8 07:06:44 MST 2003

Venezuelan oil output has fallen from 3.1m bbls/day to about 10% of that
level now.

Social crises in oil-producing states have the effect of permanently
damaging future output levels. Russian oil production fell be almost half
during the collapse of the USSR. There has recently been a partial recovery
but this seems likely to be very short-lived because no major new finds have
been made. In 1979 Iran's oil production, which rivalled Saudi Arabia's,
plummeted from six million barrels a day to less than two million. In the
decades since, Iran's oil output has been about half the pre-revolution
levels. In Iraq, production fell from about 5m bbls/day before the 1991 Gulf
War to about 1m bbls/day today.

The Washington/London Axis of Evil's assumption seems to be that post-Saddam
Iraqi production can be raised to 10m bbls/day. Suppose it cannot? Suppose,
instead, that Iraqi production takes another hit, and that the war spreads
to Saudi Arabia and he Gulf States, hitting output there too?

If, as this article speculated, Venezuelan output never recovers, it means
that the Bush attempt to depose Chavez has ALREADY cost up to 2m bbls/day
even if they do succeed in deposing Chavez. Was it worth it?

The Age of Oil Wars has arrived. A lesson already observable from history is
that output declines are never homogenous, predictable and stable. A middle
east conflagration may have epic economic consequences. Meanwhile, Britain's
North Sea oil output fell by 6% last year alone; the North Sea is finished.
The Caspian according to some sources hat I believe has exploitable reserves
of no more than 20bn bbls--about half the North Sea's original endowment and
about 9 months present world supply. The Caspian Boom, as I've argued for
more than two years, was another economic mirage of the 1990s.

The USA now imports 60% of its oil and US natural gas production faces a
crisis of accelerated depletion.

It is an interesting moment in history. Never was there such desperation to
get their hands on reliable energy supplies visible in the capitalist class
and its ruling elites. Never were the risks of military adventures in the
Middle East backfiring, so fraught with consequence for the entire
capitalist world order.


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