Venezuela’s Oil Reserves and the U.S.

Stephen Lendman

Posted May 23, 2006      •Permalink      • Printer-Friendly Version
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New Estimate of Venezuela’s Total Oil Reserves Makes
It the Grandest of Grand Prizes for US

by Stephen Lendman

I just finished reading an important new book the
author’s publisher sent me, which I’ll shortly be
reviewing for publication.  The book is investigative
journalist (and in his words “forensic economist”)
Greg Palast’s latest foray into exposing the hidden
from view crimes and wrongdoings of the Bush
administration.  I’m very familiar with Palast’s
important work and can only wish many others of his
profession did the same sort of it he does - his job.
Sadly most don’t, but luckily we have some who do, and
we should pay close heed to what they tell us.
They’re our window to the dangerous world around us,
and the information they provide is our protection
from it.

Palast’s book is almost encyclopedic in detail, but I
only want to focus here on one part of it that relates
to Venezuela.  In it Palast provides information
showing the country may be of far greater strategic
importance to the US than we likely realized.  It all
relates to a somewhat arcane theory called Hubbert’s
peak that many readers may not know about or
understand well if they do.  Before reading Greg’s
book, I knew about it but didn’t understand it as well
as I do now.

M. King Hubbert was a well-respected geologist of his
time who on March 7, 1956 published a research paper
explaining his notion of “peak oil,” the amount of
total reserves likely to be available, when production
would peak, and when we would likely exhaust a finite
supply.  Ever since his report came out, it’s been
held up as gospel by many who follow the oil market.
The essence of the Hubbert theory, whether we accept
it or not, was that “peak oil” would be reached around
this year.  However, in fact, production rose every
year since Hubbert’s prediction and new discoveries of
oil have so far kept pace.

A New Interpretation of “Hubbert’s Peak”

M. King Hubbert may have been a fine geologist
deserving of the his reputation.  But today we know
much more than Hubbert did in his time, and it’s
currently believed by some savvy analysts that we’re
nowhere near peaking or running out of oil.  Palast
sides with that view and concludes that we have enough
oil left untapped to last many decades into the
future.  Why? Because there’s oil and then there’s oil
- there’s the easy to find and refine kind called
“light sweet” like what’s abundant in the Middle East,
and there’s also the harder to find, more expensive to
refine so-called “heavy crude” and oil available from
tar sands.  When the latter two categories are added
in, the amount of total oil available skyrockets to
off-the-chart numbers.

Palast makes a key point related to the price of
crude.  At $10 a barrel the supply is low because only
the easy to extract and refine kind are economically
feasible.  But at $70 a barrel it’s a whole new oil
market.  The heavy stuff and tar sands then become
economical to extract and refine, and a new far higher
finite supply is realized almost magically.  In short,
it’s just a question of supply and demand and how the
price of a commodity depends on how much of it
consumers want.  Too little demand and the price is
low, but when it’s high like now and rising, then so
does the price.

How This Relates to Venezuela

From what we know for sure plus what we think we may
know about Venezuelan “total” oil reserves, I suggest
the reader first take a seat and buckle up.  In
previous articles, I reported Venezuela may have
reserves of about 350 billion barrels if all their
known heavy and light crude are counted.  That total
is far more than is now officially recognized by OPEC
which means unofficially the country has greater
reserves than Saudi Arabia by that number alone. 

But wait, there’s more, a lot more.  Palast reports a
US Energy Department expert believes Venezuela holds
90% of the world’s super-heavy tar oil reserves - an
estimated total of 1,360,000,000,000 (1.36 trillion)
barrels.  Let me repeat that - 1.36 trillion barrels.
That alone is more oil than Hubbert believed 50 years
ago lay under the entire planet. 

Again, back to the key issue.  Whatever the true
highest estimate of reserves is from all varieties of
oil, those reserves are only available at a price.  If
it ever gets too low again, which looks unlikely,
those heavy reserves and tar sands oil will again go
off the charts and be uncounted.  However, with
today’s heavy demand and the likelihood of it
continuing to grow in the future, the price of oil may
continue to rise and all reserves from all sources may
be needed and used to supply the market.

So with a report like this coming from an apparent
credible source (according to Palast) in the US Energy
Department, it takes little imagination for VHeadline
readers to understand more than ever that Venezuela is
likely viewed by any US administration as the world’s
most important source of future oil supply.  And to
readers who understand US imperial intentions, it
takes even less insight to realize the Bush
administration intends to go all out to get its hands
on it even if it takes a war to do it.  The US goal
isn’t access to the oil.  It’s control of the supply
and its price, what countries get it and how much and
which ones don’t, what companies profit from it, and
overall how this ocean of oil can be used as a
strategic resource and weapon.  Beyond question, the
stakes are enormous, and the battle lines are now
drawn more clearly than ever. 

I’ve reported before on VHeadline that the US is now
planning a fourth attempt to oust Hugo Chavez by
whatever means it has in mind.  I think the wheels of
its plan are now in motion, but we won’t know what
will unfold until the fireworks begin.  With the
information now available and published here, I feel
more certain than ever that US instigated serious
trouble is heading toward Venezuela and maybe harsher
than we might expect.  Venezuela’s likely total oil
reserves are potentially so great that the country has
to be the grandest of grand prizes for the US.  It’s a
virtual certainty the US will do anything it takes to
try to seize and control it.  For those of us who
respect the sovereign rights of all nations and the
obligation their leaders have above all else to serve
the needs of their people, we can only hope Hugo
Chavez is prepared for what he knows is coming and
will again succeed in deterring it.

Stephen Lendman lives in Chicago and can be reached at
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