Vlad and Hugo Hit an Oil Slick

Oh, the many benefit of cheap oil...

Vlad the Impaler can't be happy:

MOSCOW (AP) - Russia would come under crippling financial pressure and may need to raise money externally if oil languishes at an average of $30 a barrel over the next two years, the World Bank predicted Friday.

The bleak scenario would mark a rapid unraveling of Russia's oil-fueled economic gains over the past eight years, during which time the government has paid down most of its foreign debt and built up a vast stockpile of international reserves.

Fidelito Chavez of Venezuela is now in a big hole. He blew the oil profits on buying friends instead of upgrading infrastructure. This is from The Telegraph back in October:

The state oil company, PDVSA, produced 3.2 million barrels per day in 1998, the year before Mr Chavez won the presidency. After a decade of rising corruption and inefficiency, daily output has now fallen to 2.4 million barrels, according to OPEC figures. About half of this oil is now delivered at a discount to Mr Chavez's friends around Latin America. The 18 nations in his "Petrocaribe" club, founded in 2005, pay Venezuela only 30 per cent of the market price within 90 days, with rest in instalments spread over 25 years.

The other half - 1.2 million barrels per day - goes to America, Venezuela's only genuinely paying customer.

"There is a bottleneck in the Venezuelan production system," said Mazhar al-Sheridah, 68, an oil expert at the Central University of Venezuela. "It will cost at least $32 billion to build another three upgrading units and take some five years, meaning that Venezuelan production is stuck at current levels for a while yet."

All this means that Venezuela has missed much of the benefit from the oil boom and, now that prices are falling, Mr Chavez faces huge financial problems. Nobody is sure at what point his government would be unable to pay its bills, but most sources consulted believe this would probably happen if oil falls to $80 a barrel. Yesterday, oil was trading at $79.80.

The fat little tin pot dictator laughed at the USA's financial problems, but was too stupid to realize that if his only paying customer fell on hard times, he could not escape a similar fate:

Chavez has accumulated foreign reserves and organized loans from nations such as China to shield his socialist government from a protracted fall in income. But economists say he may have to slash spending if the oil price, which was at a 20-month low on Wednesday, remains low deep into next year.

Chavez initially reveled in the financial collapses in the United States. But as the crisis has widened to hit economies worldwide and caused oil prices in recent weeks to plunge he has begun to warn Venezuelans of the possible impact at home. (Reporting by Saul Hudson; Editing by Frank Jack Daniel and David Gregorio)

Enjoy the schadenfreude while you can. Odds are one of these men, or perhaps their grubby little gay-bashing buddy from Iran, will manufacture some global crisis to drive the price of oil back up.

http://www.breitbart.com/article.php?id=D955PMC80&show_article=1

http://www.telegraph.co.uk/news/worldnews/southamerica/venezuela/3183417/Venezuelas-oil-output-slumps-under-Hugo-Chavez.html

http://www.reuters.com/article/oilRpt/idUSN1229709920081112