Venezuela has cut-off Exxon Mobil from access to its oil as a result of a legal stand-off. Unfortunate for Exxon Mobil, sometimes business deals go badly, but Chavez flies off the handle accordingly by making it some kind of larger issue. Incredibly, he threatens an "economic war" on the U.S. by cutting off supplies of his oil. Apparently he does not realize 2 important points.
1. Who "we" (U.S. firms) buy oil from is not particularly important. Unless they are selling it to us below market price, we would pay largely the same price regardless of who actually delivers the oil. Even as large suppliers, it will be a tiny supply shock at most, as there will be a rearranging of contracts among the different firms.
2. The U.S. economy is massive, the rest of the world is just a bunch of ants compared to us. We are a market economy, we practice relatively free trade internationally and very free trade among our own states. Both the size of our pie and the size each person receives in our country makes us giants in a land of ants, and Venezuela is a small ant. The last country to enter into an economic war on the U.S. was the largest and most powerful socialist regime the world had ever seen and it barely reached our knee-caps before crashing into non-existence. That was almost 20 years ago. We're even bigger and stronger than before with more economic freedom. Meanwhile Chavez is no Stalin, and Venezuela is no USSR.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment