[Ronin]

How do you figure?

They can't even feed themselves out of their own agriculture. They are already importing two thirds of their food. One third of that from the US. The official Dollar to Bolivar exchange rate is a total joke — the US dollar being the defacto currency in any case.

Manufacturing and heavy industry outside the oil industry is, for the most part, nonexistent and the middle class of the country is constricting back to the poverty level or fleeing the country.

The only thing that is holding that country’s economy together is the infusion of petrodollars from the US. Cut that pipeline and the ripple effect through all levels of the society would be immediate and profound.

And don’t say that they would just sell the oil somewhere else. Refinery capacity is a hard number. There are only so many refineries in the world, they are all booked with hard-contracts months, and in some cases, years in advance.

Plus, as another FReeper pointed out, the Venezuelan crude is very heavy in impurities and needs special refining to be usable. The refineries that can handle it are in the United States. If we don’t buy it, they can’t sell it.

[thackney]

How do you figure?

Because most of their oil is refined outside the US. We could only affect a minority portion, if we would have any effect at all.

And don’t say that they would just sell the oil somewhere else. Refinery capacity is a hard number. There are only so many refineries in the world, they are all booked with hard-contracts months, and in some cases, years in advance.

If every refinery was booked 100% for years in advance, there would be no spot oil market and not futures market closer than years in the future. As we both know, that is not the case.

If our refineries are booked years in advance with Venezuelan oil, why would breaking our contracts be any harder than anyone else's breaking theirs?

as another FReeper pointed out, the Venezuelan crude is very heavy in impurities and needs special refining to be usable

That only describes a portion of their oil, and not the majority of their production. The newer large reserves of the Orinco belt is very heavy, but accounts for a smaller minority of their oil production. Venezuela has not been a major oil producer since the 1910's because they have horrible, undesirable oil.

The refineries that can handle it are in the United States.

There are refineries all over the world that can handle heavy oil. And as shown above, most of Venezuela's oil is already refined elsewhere. Also Venezuela is not the only country in the world producing some heavy oil.

[thackney]

The description below only describes the refineries owned by Venezuela. It does not include refineries owned by other companies or countries.

According to OGJ, Venezuela had 1.28 million barrels per day (bbl/d) of crude oil refining capacity in 2007, all operated by PdVSA. The major facilities include the Paraguana Refining Center (955,000 bbl/d), Puerto de la Cruz (195,000 bbl/d), and El Palito (126,900 bbl/d). Through PdVSA and its subsidiary CITGO, Venezuela also controls significant refining capacity outside of the country.

EIA > Home > International > Country Analysis Briefs > Venezuela
http://www.eia.doe.gov/emeu/cabs/Venezuela/Oil.html

[thackney]

If you or others are really interested, the link below lists many of the worlds oil qualities and compares them. Venezuela oil is in general a lower quality oil but nowhere near as bad as some would describe and not out of the range of most refining capabilities.

http://www.meglobaloil.com/MARPOL.pdf