U.S. consumers have another reason to worry about gas prices. Two of the largest oil-producing nations in the world are forming a military alliance, and neither nation likes the U.S.
According to The Wall Street Journal, "Venezuela's President Hugo Chávez signed new energy agreements with Russia on Friday, shortly after obtaining a $1 billion loan to buy more Russian arms."
Chavez has kicked a number of U.S. and EU oil companies out of his country as he has nationalized the industry. It would not be beyond imagination that Russia and the South American nation would use a combination of oil and guns to try to weaken U.S. influence in its own hemisphere and force America into more military spending to patrol the regions to its south.
Chavez has already begun spreading money around to his neighbors in the hope of being viewed favorably. Having a stronger military presence should help him make the case that he can keep the U.S. from using its power to push him out of his role as the most powerful political figure north of Brazil and south of Mexico.
Oil-consuming nations can hardly afford to see more crude exports fall into entrenched and hostile hands. The recent past shows that even a brief interruption in supply can send oil prices rocketing up. The chances of that happening are increasing. Russia and Venezuela are heading from becoming troublesome to being real threats. All they have to do is turn off the spigot for a few weeks.
Douglas A. McIntyre is an editor at 247wallst.com.
Reid Hoffman: LinkedIn will go public (at some point)
Retailers can't wait for Black Friday, open Thursday
Tiffany's serves up solid quarterly earnings
Reader Comments (Page 1 of 1)
9-27-2008 @ 7:04PM
RIFF RAFFLESS said...
CHAVEZ IS A NO GOOD ,BENITO MUSSOLINI WITH OIL FIELDS..
9-27-2008 @ 9:07PM
DaveF said...
After supporting a military coup against Chavez, who was elected and putting missle defense batteries into Poland without any regard for Russian strategic interests. Russia is supposed to depend on the trustworthiness of this president?It doesn't take a genius to see that Bush policies have pushed these two closer, the old saying is 'the enemy of my enemy is my friend'. Bush has made it so internationally the US administration has few friends and no credibility.
9-27-2008 @ 10:24PM
ed1305 said...
Unfortunately, when the economy finally bottoms out and stabilizes, our demand for oil will fall, too. The industries that should grow during this period are alternative energy companies. Rather than wasting money on a bailout, we should loan money to, and subsidize them, so that when the economy begins to recover we won't be on the same oil dependent path.
On a similar note, if we put the oil companies' feet on fire about why diesel is more than premium our economy would recover a lot faster. Diesel is the cheapest fuel to make, and the most expensive to buy. Something is wrong. The fed tax difference is what a nickel?. If it is a supply demand argument, then force oil companies to make more and let gas go up. Diesel inflates the price of farming,transportation of the food, and inflates the cost of virtually everything we buy. Cheaper Diesel would have a huge impact on costs. Venezeula, Russia, Iran,Iraq and the rest would be of far less interest if we position ourselves to aggressively pursue alternatives. A market crash might let us focus on doing just that. By the way corn ethanol is a horrible attempt at an alternative fuel. That bad decision drove up the cost of corn, cereal, and feed for beef and chicken which drove up the cost of meat, milk, egss, etc. It didn't make a dent in oil dependence, and had no effect on pollution due to the the energy used to grow, harvest, and refine it. Just one more example of the Bush administration, as if we really needed anymore after the unnecessary war on Iraq, an economy in collapse, an embarrassing ability to react to natual disasters, etc. I think that stays with the guidelines of the blog;he and oil are pretty tight.