mersenneforum.org - Official "Extremely Unctuous Antics" Thread

Time to update those Valero gas prices I've been posting since early summer - they have tumbled a full dollar in the past 6 weeks, and are now as low as they were in early Spring:
[code]
Mon, 22 Sep: 3.79[sup]9[/sup]
Fri, 26 Sep: 3.76[sup]9[/sup]
Mon, 29 Sep: 3.74[sup]9[/sup]
Wed, 01 Oct: 3.72[sup]9[/sup]
Fri, 03 Oct: 3.69[sup]9[/sup]
Mon, 06 Oct: 3.69[sup]9[/sup]
Tue, 07 Oct: 3.67[sup]9[/sup]
Wed, 08 Oct: 3.65[sup]9[/sup]
Fri, 10 Oct: 3.59[sup]9[/sup]
Wed, 15 Oct: 3.57[sup]9[/sup]
Thu, 16 Oct: 3.47[sup]9[/sup]
Tue, 21 Oct: 3.39[sup]9[/sup]
Thu, 23 Oct: 3.37[sup]9[/sup]
Mon, 27 Oct: 3.33[sup]9[/sup]
Tue, 28 Oct: 3.19[sup]9[/sup]
Wed, 29 Oct: 3.15[sup]9[/sup]
Thu, 30 Oct: 3.09[sup]9[/sup]
Fri, 31 Oct: 2.89[sup]9[/sup]
Mon, 03 Nov: 2.85[sup]9[/sup]
[/code][URL="http://www.bloomberg.com/apps/news?pid=20601086&sid=aCDKyxSkIXYc&refer=news"]Chavez`s Ambitions in Venezuela, Abroad May Collapse Along With Oil Prices[/URL]: [I]The same tumbling oil prices that led OPEC to slash output last week threaten to send Venezuela`s economy into a tailspin, and put an end to President Hugo Chavez`s ambitions to expand his socialist revolution at home and abroad.[/I]
[quote] Oct. 27 (Bloomberg) -- The same tumbling oil prices that led OPEC to slash output last week threaten to send Venezuela`s economy into a tailspin, and put an end to President Hugo Chavez`s ambitions to expand his socialist revolution at home and abroad.

To cope with plummeting oil revenue, the source of half the government`s spending, Chavez may have to cut domestic handouts and foreign aid. The first items likely to go will be arms purchases from Russia, oil subsidies for Cuba, and job- creating local projects such as bridges and subways, economists say.

``You have a country with an oil boom, that doesn`t know how to save, doesn`t know how to set up productive industries that generate jobs, and goes into debt,`` said Elsa Cardozo, a professor of political science and international relations at the Universidad Central de Venezuela. ``Then oil prices fall and the party ends.``

Venezuela may be poised to repeat the economic collapse it suffered in the 1980s at the end of its last oil boom. Former President Carlos Andres Perez, employing policies similar to Chavez`s, lavished petrodollars on public works projects, foreign aid and nationalizations in the late 1970s, setting the stage for a 1983 currency devaluation and spending cuts that sent millions of Venezuelans into poverty. [/quote][B]My Comment:[/B] It couldn`t have happened to a nicer radical-leftist demagogue. My heart goes out to the Venezuelan people, but OTOH since Chavez came to power via a democratic election, they are getting the government they voted for.
[quote]Venezuela spent $4.4 billion on 12 contracts for Russian weapons, the Kremlin said. The agreements include deals to buy 100,000 Kalashnikov rifles, 50 military helicopters and 24 Su- 30 fighter jets, according to a U.S. Defense Intelligence Agency report. Russia last month offered Venezuela a $1 billion line of credit to buy more weapons.

The president has also used his oil-fed largesse to offer subsidized financing for poor countries in the Caribbean and Central America to buy Venezuelan oil products. As of July, the 18 countries in his Petrocaribe alliance were receiving up to 200,000 barrels of oil a day.

Domestically, Chavez may have to end his drive to nationalize businesses in the so-called strategic sectors, Grisanti said. The government so far has swept up the country`s biggest telephone, electricity and steel companies, among others, at an estimated cost of $11 billion, according to Ecoanalitica, a Caracas-based economic consultant.

Tripled Spending

Chavez probably won`t cut spending on the social ``missions`` that have brought services such as health care and adult education into some of the country`s most impoverished areas and which have been key to securing electoral victories. Chavez has more than tripled total government spending in the past five years. [/quote][B]My Comment:[/B] Here you have the key disconnect - if Chavez had increased spending on health care and education for the poor without at the same time spending huge sums on weapons purchases and programs to "export the revolution" and nationalize nearly all of Venezuela`s key industries, the situation for the country now would look very different, and oil would not have to remain at $60 or more per barrel to balance the budget. [Although irrespective of the "revolutionary" spending, high crime and rampant inflation and cronyism had already significantly eroded Mr. Chavez` approval rating, even among his most loyal supporters.]

Related NYT Op-Ed on how falling oil prices and a new U.S. President (specifically one not named McCain) might change the dynamic between the U.S. and countries like Iran, Russia and Venezuela:

[URL="http://www.nytimes.com/2008/10/29/opinion/29friedman.html?_r=1&ref=opinion&oref=slogin"]NYT OP-Ed | Thomas Friedman: Sleepless in Tehran[/URL]
[quote]I’ve always been dubious about Barack Obama’s offer to negotiate with Iran — not because I didn’t believe that it was the right strategy, but because I didn’t believe we had enough leverage to succeed. And negotiating in the Middle East without leverage is like playing baseball without a bat.

Well, if Obama does win the presidency, my gut tells me that he’s going to get a chance to negotiate with the Iranians — with a bat in his hand.

Have you seen the reports that Iran’s president, Mahmoud Ahmadinejad, is suffering from exhaustion? It’s probably because he is not sleeping at night. I know why. Watching oil prices fall from $147 a barrel to $57 is not like counting sheep. It’s the kind of thing that gives an Iranian autocrat bad dreams.

After all, it was the collapse of global oil prices in the early 1990s that brought down the Soviet Union. And Iran today is looking very Soviet to me.

As Vladimir Mau, president of Russia’s Academy of National Economy, pointed out to me, it was the long period of high oil prices followed by sharply lower oil prices that killed the Soviet Union. The spike in oil prices in the 1970s deluded the Kremlin into overextending subsidies at home and invading Afghanistan abroad — and then the collapse in prices in the ‘80s helped bring down that overextended empire.

(Incidentally, this was exactly what happened to the shah of Iran: 1) Sudden surge in oil prices. 2) Delusions of grandeur. 3) Sudden contraction of oil prices. 4) Dramatic downfall. 5) You’re toast.)

Under Ahmadinejad, Iran’s mullahs have gone on a domestic subsidy binge — using oil money to cushion the prices of food, gasoline, mortgages and to create jobs — to buy off the Iranian people. But the one thing Ahmadinejad couldn’t buy was real economic growth. Iran today has 30 percent inflation, 11 percent unemployment and huge underemployment with thousands of young college grads, engineers and architects selling pizzas and driving taxis. And now with oil prices falling, Iran — just like the Soviet Union — is going to have to pull back spending across the board. Fasten your seat belts.[/quote]