Saturday, May 08, 2004

Restrictive oil policies continue to pay off for Venezuela 

In another sign of the outstanding success of Venezuela policy of defending oil prices Venezuelan Energy Minister Rafael Ramirez stated that Venezuela has run a budget surplus of $2.7 billion over the first four months of the year. Due to OPECs policy of restricting production, along with ongoing instability in the Middle East, oil prices are now over $40 per barril. Venezuelan oil ,which sells at a discount to other lighter crudes, is currently selling at $33.40 per barrel. Over the first 4 months of the year it had an average price of $29/barrel while the governments budget assumed it would only average $20/barrel. The higher prices are leading to a windfall for the government which needs the funding for its extensive social programs.

Ironically, Minister Ramirez attempted to lay the blame for the higher prices at the doorstep of President Bush. He claimed that it was the current fighting in Iraq that was creating the higher prices and the OPEC had nothing to do with the price increase. This is obviously not the case and Minister Ramirez said it to deflect blame from OPEC and thereby lesson pressure on it to increase production.


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