December 3, 2008

My oil minister went to Cairo, and all I got was a lousy Constitutional Amendment

Juan Cristobal says: - One has to wonder if the decision to recklessly plunge ahead with the Constitutional Amendment had anything to do with the disastrous emergency OPEC meeting held in Cairo last weekend. According to reports, the countries could not agree to reduce output amid plunging demand for oil and tanking prices.

This New York Times report talks about the group having a "frayed message," saying there are "unmistakable signs that the group was struggling to maintain unity." It goes on to say,
Signs of tensions remain. The Gulf states, led by Saudi Arabia, are unwilling to approve further trims before other members follow through on previous commitments to reduce output, particularly Iran and Venezuela.

Analysts said the Saudis wanted to show just how serious it was about all cartel members sharing the burden. Even as the Saudis appear ready to play hardball, OPEC is laying the groundwork for a more coordinated approach.

The US, Germany and Britain are officially in a recession, and the Saudis are not playing nice. When your cartel is in disarray and your customers are finding it tough to make ends meet, the situation is serious. Chavez realized this and came to the conclusion that, when it came to the Referendum, it was now or never. Hence, the timing of the announcement and, more importantly, the haste.

PS.- Don't miss this fantastic op-ed piece from Teodoro Petkoff. Outstanding.