Thursday, September 21, 2006

Chavez and Ahmadinejad: Its About the Oil

An interesting idea hit me as I was watching the coverage of Venezuelan President Hugo Chavez's little speech at the United Nations yesterday. Since the first Gulf War under Bush 41 it has been a popular tactic among the enemies of the United States to say that we were only after the oil. They use this thesis against the US for every action we've had in the Middle East (Gulf War, a military presence in Saudi Arabia, Afghanistan, Iraq, and possibly Iran in the future). Their premise is that the Bush family is trying to help out their 'good ol boy' friends in the oil industry by grabbing more oil from fields in the Middle East. I want to propose an alternate to this theory. What if it's not the Bush family that is motivated by oil? What if its really Chavez and Ahmadinejad that are motivated by oil?

When Chavez took over in Venezuela the economy was absolutely bankrupt there. The way he turned it around was to seize the privately owned oil fields turning the Citgo oil company into a state owned company. He then uses the revenues generated by that oil company to give away freebies to the public of all sorts. This keeps him very popular in that country, and thus keeps him from being subject to a coup (a tactic he once attempted on his predecessor). Each time their public opinion polls about him dip he uses the oil company revenues to hand out free stuff. In short, he bribes his people with oil money. As a result, the entire economy of Venezuela is dependent on the price of oil.

In Iran, you have another country whose economy is dependent on the price of oil. Iran sits on one of the biggest oil reserves in the world. The Iranian government doesn't use the same tactics as Chavez with oil, but their economy is still just as dependent on oil.

Over the past few years (in particular since September 11th) the price of oil has been on the rise setting records on a regular basis. The cost of a barrel of oil has risen even into the mid $70 range. OPEC and other countries (including Iran, and Venezuela) that export large amounts of oil have been doing extremely well because of this steady increase in the price of oil.

Experts generally attribute the periodic increases in oil prices to either conflict (or the potential for conflict) in oil rich countries, or to natural disasters that can affect the oil supply (such as hurricanes).

However, oil has been on the decline for the last couple of months. As I write this oil futures are sitting at nearly $61 a barrel and industry experts are predicting it to go even lower (my gas bill is really looking forward to that). Experts are attributing this to a quieter that predicted hurricane season and the fact that the Israel/Hezbollah conflict back in July did not spread to the other countries in the region.

What has this mean for Chavez and Ahmadinejad? It means that the oil that their countries have been exporting have not been bringing in as much revenue. For Chavez in particular this is very bad. If the oil in his country continues to go down in value he will not be able to pay off the people of his country with the freebies he normally hands out. He could then wind up with a coup on his hands and him thrown out of office. For Iran, it means less revenue to pay for their military and for the terrorist organizations that they sponsor such as Hezbollah and Hamas.

So with the price of oil on the decline, what does Ahmadinejad and Chavez do? They have their little Non-Aligned Nations meeting where they gather all the enemies of the US. They talk their tough talk about how they're going to bring down the evil US Empire. Then they come up to the United Nations where they have a captive audience of every major media outlet and do things like call President Bush "el Diablo" and say that the time of the United States running the world is over. In short, Chavez and Ahmadinejad are trying to start a fight with the United States.

Why would they do that? Almost every market expert agrees that a war between the United States and Iran (or the threat of a war) would raise the price of oil, which would then raise the revenue into Iran and Venezuela. This is their motive for their tough talk against the United States.

So the real oil conspiracy that is going on might not be with the Bush family and the oil companies as the left wing moonbats keep on saying. The real oil conspiracy might actually be with the oil rich countries such as Iran and Venezuela. Just my thoughts.