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Chavez Nationalizes Columbian Oil Projects

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By Kendall J from The Crucible & Column,cross-posted by MetaBlog

In a follow-up to my <a

href="http://crucibleandcolumn.blogspot.com/2006/09/bolivia-to-oil-companies-come-back-we.html">

post on Bolivia's Evo Morales nationalization of Bolivia's oil fields, it seems

that Latin Socialists are at it again. This time, it's Hugo Chavez who is holding

ceremonies to nationalize four Columbian oil projects, pushing out national firms

(now that they've done the hard work, of course)

There is no denying that natural resource, especially oil, artificially prop up

socialist dictators by masking the damage done by their policies. And Mr. Chavez is

on a mission to damage the United States as best he can.

...as long as Mr. Ch&aacute;vez is in charge, his government seems bent on

favoring

state-run companies from governments he considers friendly. Consider the list

of

winners of contracts handed out to companies to certify oil holdings in the

Orinoco region in the last two years: Vietnam, Iran, Brazil, and China. Last

month, PDVSA signed a deal with Belarus to work in the Orinoco. Meanwhile,

today's nationalization ceremony pushes out U.S. companies

<a

class="times rolloverQuote"

onmouseover="window.status=(' Quotes & Research for XOM');return true"

onmouseout="window.status=('');return true"

href="
http://online.wsj.com/quotes/main.html?type=djn&symbol=xom">
Exxon

Mobil

Corp.,
ConocoPhillips

and
Chevron

Corp., along with Britain's
BP

PLC, France's
Total

SA and Norway's
Statoil

ASA.

For a time I used to get frustrated about the artificial success of disgusting

policies like these. I still chafe at the injustice, but I also know that once the

oil becomes more expensive to develop and produce that the tarnish will show on

Chavez' rhetoric and the rhetoric of those like him. The cost of extracting oil

increases long before oil reservoirs are depleted (even Saudi Arabia's oil fields are

nearing a marked increase in production cost once they shift to secondary

production), but it happens slowly; enough time for at least one or two generations

of socialist thugs like Chavez to prosper. Underneath however, one can see the impact

that his policies are having.

However, Mr. Ch&aacute;vez's own policies may stand in the way of him

carrying

out his plans. The leader's focus on social spending has turned PDVSA into a

poverty-alleviation ministry more than an oil company, and left the company

with

little focus. Venezuela's output has fallen to 2.4 million barrels a day from

3.1 million barrels a day since Mr. Ch&aacute;vez took office in 1999. Mr.

Ch&aacute;vez

recently paid off the last portion of debt owed the World Bank using

Venezuela's

oil income and paid off all debts with the International Monetary Fund

shortly

after taking office.

Raiding oil profits to pay off national debt and put the country on welfare (along

with providing handouts to other socialist countries) will mean that when costs do go

up. PDVSA won't have the resources to continue without help. Here's hoping that

foreign oil companies don't give it to them, at least until someone better than

Chavez is in office.

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