[Paleo Conservative]

Mr. Lugar should recall we're in a world market for crude oil. If Chavez pulls Venezulean crude from the US market, crude from another supply point will be backed out of the market.

The only way Venezuela could keep their oil away from the US would be to not export to anyone. If you look at a map, it is crazy for Chavez to try to sell his oil to China. Shanghai is 9,950 miles from Caracas via the great circle route that goes through the polar ice cap and the Arctic ocean. Actual feasible shipping routes would be at least 12,000 miles. Venezuela is on the wrong side of the Panama canal.

This map shows distances 10,000 and longer from Caracas, Venezuela shaded.

[Eric in the Ozarks]

Smaller tankers can traverse the Canal but their freight is higher because they haul less. Chavez doesn't worry about what the netback is to the Venezuelan people. He's more interested in becoming a demigod to the Left.

[labard1]

Also, Venezuela has a major interest in at least one refinery in the US (which is specifically designed to process heavy Venezuelan crude) and a significant retail franchise (Citgo, I believe), so it would be even more costly for Venezuela to walk away from the US market. Doesn't mean it won't happen, but it would make no economic sense to do so.

[capt.P]

The cost difference between transshipment of crude 3,000 miles by sea and 12,000 miles by sea works out to about 6.8 cents per gallon of cost by the standard projection, or up to 9.98 cents per gallon by a more conservatie estimate.


In other words, it would still cost less than a dime a gallon to move crude to China by sea, as opposed to moving it to the US.