Thursday, June 26, 2008

Let us sit down and talk about oil!

On June 26, 2008 I published in Caracas an imaginary letter from Arnold Schwarzenegger to the citizens of Venezuela and in which he offers to buy, on a rolling five years average price, 2 million of oil barrels per day, so as to satisfy the needs of his California constituency and also to take the worst of that volatility out of the market that keeps his electorate running crazed between Hummers and hybrids.

To provide the Venezuelans with the incentives to entering into such a contract Arnold is offering to pay an equal share of the proceeds, to each one of the 26 million citizens of Venezuela, in the currency and in the account each one of them would order… instead of giving all that money to chávez.

Economics is about making the most out of scarce resources and so when seeing the oil suppliers in OPEP exercising their powers successfully, which is OK since oil in a non renewable resource and since the world at large should benefit from consuming less of it, one cannot help but ask why the consumers do not exploit their powers as consumers. I suspect because there are some not wanting them to do that.

I wonder what the Venezuelans would say if they would formally receive such an offer from Arnold since today the primary reason for which Venezuela is not exporting more oil, even though its citizens might need the money, is that its government gets more oil revenues than it can handle… in fact so much that they even give away some of the oil to London and Boston.

Fellow citizens from oil supplying and oil consuming countries, why do we not sit down and talk about it all, without intermediaries like oil companies or oil dictators?