SHUT UP! Mister Embassador(s)

[FreeChile]

Some ambassadors should just never open their mouths. No wonder Cheney asked that trigger happy lady to just shut up for a while. Well, I've highlighted the ridiculous statement from Mr. Brownfield.

http://www.washtimes.com/world/embassy.htm

Embassy Row
By James Morrison
March 21, 2006

Empty oil threat

The U.S. ambassador to Venezuela dismissed President Hugo Chavez's threat to cut off oil sales to the United States and predicted that Americans would find another market for their fuel needs.
Ambassador William Brownfield told Venezuela's El Universal newspaper yesterday that the oil sales benefit both countries. Venezuela is often cited as the world's fifth-largest exporter of oil.
"The United States could survive with its economy intact without Venezuela as an oil supplier," he said.
"That would be a massive shame, as this is a mutual relationship that serves both [countries]. If Venezuela decides not to sell us oil, they could go to other markets. We would do the same."

 

[Jorghnassen]

Fungible. That is all I have to say.

 

[Grammatron]

As Fungible as the commodity may be he just added few cents to the price of gasoline.

 

[Jorghnassen]

As Fungible as the commodity may be he just added few cents to the price of gasoline.

Everything makes gas prices rise . The next excuse might be uncertainty in Bush's choice of tie for his next public appearance.

 

[Grammatron]

Everything makes gas prices rise . The next excuse might be uncertainty in Bush's choice of tie for his next public appearance.

Yes, thus we don't need anymore reasons

 

[Manny]

What would you have him say? He made a factually correct statement in response to a good-faith question from a newspaper, all the while emphasizing that it would be a good thing for both parties if the oil trade would continue.

 

[JamesDillon]

What would you have him say? He made a factually correct statement in response to a good-faith question from a newspaper, all the while emphasizing that it would be a good thing for both parties if the oil trade would continue.

I agree; what's so outrageous about this?

 

[Rob Lister]

I agree; what's so outrageous about this?

I agree to. How dare he state the facts.

What kind of diplomancy is that?

This statement is not only a statement of fact, but subtracts political advantage from Chavez's: in effect, he's calling his bluff. This will likely impact the market briefly but even If Chavez follows through, it will have no impact other than the markup a third-party pass-though might require.

 

[Manny]

Oh, it'll be worse than that. Venezuelan oil is junk. It's heavy and it's sour. If it were any worse you'd have to heat it to get it on and off of tankers. As a result, it sells at a substantial discount to better-quality crude. A lot of US refineries have made substantial capital investments to use that crude and thus capture the discount (less the capital costs, of course). If Venezuelan oil starts going to, say, China than those refineries would have to buy higher-quality, more expensive crude and face the stranding of those capital costs.

It wouldn't be the end of the economy as we know it by any means, more like a three-to-five-ish cent per gallon increase in the marginal cost of the low-cost gasoline producers. But boy would it have those guys hopping mad.

One of those guys, by the way, is Citgo. Heh.

 

[FreeChile]

What would you have him say? He made a factually correct statement in response to a good-faith question from a newspaper, all the while emphasizing that it would be a good thing for both parties if the oil trade would continue.

Looking at the following charts from the Department of Energy, I would say the ambassador’s statement I highlighted is not a statement of fact. I am focusing on the word “intact” in his statement. The following charts of oil imports by country of origin, leads me to think that the US economy would not be intact. The US imports approximately 15 percent from Venezuela. Also, sifting through the Department of Energy’s web site, we find that Venezuela has produced roughly 10.4 percent of the OPEC crude between 1980 and 2004. It has been the third largest oil producing country behind Iran and Saudi Arabia.

Crude Oil and Total Petroleum Imports Top 15 Countries
http://www.eia.doe.gov/pub/oil_gas/...ons/company_level_imports/current/import.html

OPEC Crude Oil Production (Excluding Condensate), 1980-2004
http://www.eia.doe.gov/emeu/ipsr/t42.xls

 

[FreeChile]

Oh, it'll be worse than that. Venezuelan oil is junk. It's heavy and it's sour. If it were any worse you'd have to heat it to get it on and off of tankers. As a result, it sells at a substantial discount to better-quality crude. A lot of US refineries have made substantial capital investments to use that crude and thus capture the discount (less the capital costs, of course). If Venezuelan oil starts going to, say, China than those refineries would have to buy higher-quality, more expensive crude and face the stranding of those capital costs.

It wouldn't be the end of the economy as we know it by any means, more like a three-to-five-ish cent per gallon increase in the marginal cost of the low-cost gasoline producers. But boy would it have those guys hopping mad.

One of those guys, by the way, is Citgo. Heh.

You are right in saying that Venezuela itself would suffer. Now the question is who would suffer the most? I also think Venezuela is juggling its balls well to get the most benefit—however distorted that may be. CITGO is probably reaping the most benefit from the whole thing. Otherwise, Chavez would’ve been assassinated long ago. Whenever the conflict gets heated between the US and Venezuela, it provides another excuse to re-negotiate prices. It’s like going to your employer and telling it you’re going to leave for a better job if he doesn’t give you a raise. You may not entirely base your request on financial grounds (e.g. my employer is a tyrant) but in the end it is the cash that comes, if you don’t end up leaving or being fired. In the case of Chavez, he is very certain he will not get fired and he seems to be willing to go very near the edge.

It seems that the ambassador may be counter bluffing.

 

[Geckko]

Looking at the following charts from the Department of Energy, I would say the ambassador’s statement I highlighted is not a statement of fact. I am focusing on the word “intact” in his statement. The following charts of oil imports by country of origin, leads me to think that the US economy would not be intact. The US imports approximately 15 percent from Venezuela. Also, sifting through the Department of Energy’s web site, we find that Venezuela has produced roughly 10.4 percent of the OPEC crude between 1980 and 2004. It has been the third largest oil producing country behind Iran and Saudi Arabia.

Crude Oil and Total Petroleum Imports Top 15 Countries
http://www.eia.doe.gov/pub/oil_gas/...ons/company_level_imports/current/import.html

OPEC Crude Oil Production (Excluding Condensate), 1980-2004
http://www.eia.doe.gov/emeu/ipsr/t42.xls

There are five ladies on my road who sell cakes each week. Every week they lay out their stalls and manage to find buyers for their treats by the end of the day.

I have tended to buy mine from my next door neighbor, not because the cakes are superior, they are just closer. Until now.

I have recently fallen out with my neighbor and she is refusing to sell to me. So I have to walk a little further to buy my cakes and at first I had to pay a little more because I found myself competing against longer standing customers.

But surprisingly quickly some interesting things happened.

My new cake lady , encouraged by my additional demand and the higher prices she was securing started to bake more cakes.

The higher prices encouraged some people to buy elsewhere.

My grumpy neighbor had to drop her prices temporary to attract alternative customers.

In the end it seemed to me that nothing much had changed. Roughly the same amount of cakes are sold at pretty much the same prices. The same people buy the same amount of cakes, but some buy from different ladies.

My feud with my neighbor seems to have done nothing but cause both of us a little bit of temporary inconvenience.

I suppose I shouldn't be surprised.

 

[Manny]

Looking at the following charts from the Department of Energy, I would say the ambassador’s statement I highlighted is not a statement of fact. I am focusing on the word “intact” in his statement. The following charts of oil imports by country of origin, leads me to think that the US economy would not be intact. The US imports approximately 15 percent from Venezuela. Also, sifting through the Department of Energy’s web site, we find that Venezuela has produced roughly 10.4 percent of the OPEC crude between 1980 and 2004. It has been the third largest oil producing country behind Iran and Saudi Arabia.

Crude Oil and Total Petroleum Imports Top 15 Countries
http://www.eia.doe.gov/pub/oil_gas/...ons/company_level_imports/current/import.html

OPEC Crude Oil Production (Excluding Condensate), 1980-2004
http://www.eia.doe.gov/emeu/ipsr/t42.xls

Right, but oil is pretty fungible, especially for countries like the US which have made the investments to process heavy, sour crude. Say that tomorrow morning Venezuela announces that it has a long-term deal to sell all its oil to China. That's a lot of oil. All of a sudden tankers which used to depart from China from the Gulf region, from Indochina and even from Russia have no where to go. So American refiners buy that oil (Saudi first -- it's also kind of heavy and sour and sells at a discount). Like Lister said, the main thing you're doing (besides pissing off the guys who invested in high-complexity refineries) is paying a bunch of oil tanker companies to run longer routes than they used to and oil brokers to wash the country of origin.

You are right in saying that Venezuela itself would suffer. Now the question is who would suffer the most? I also think Venezuela is juggling its balls well to get the most benefit—however distorted that may be. CITGO is probably reaping the most benefit from the whole thing. Otherwise, Chavez would’ve been assassinated long ago. Whenever the conflict gets heated between the US and Venezuela, it provides another excuse to re-negotiate prices.

Despite the large number of state oil enterprises in the world, the market just doesn't work that way. The spread between heavy, sour and light, sweet has actually been increasing lately, despite Chavez' bluster. Why? Because the marginal increase in demand has come in India and China, which are short high-complexity refineries. Even more important, changes to diesel-fuel rules in Europe have reduced the ability of refineries on that continent to take middling-to-poor oil. They need the good stuff from the North Sea and Nigeria (Texan oil is the best, btw, but there just isn't too much of it left and we certainly aren't exporting it!). That spread can go the other way, of course, if and as those refineries make the necessary investments. But what Chavez says will have no effect on it.

What Ambassador Brownfield has done here is give a measured, accurate, diplomatic answer to a threat from a guy who calls his boss a pig. All in all, actually a pretty good moment for diplomacy. Would that some of the guys back in Washington learn from this example.

 

[CapelDodger]

As I understand it, Venezuelan oil is high in sulphur and needs specialised refining, most of which is in the US Gulf region. That puts a crimp in the market. I wonder whether the Chinese are increasing their high-sulphur refining capacity? Wheels within wheels ...

But thanks for that down-home, fresh-baked apple-pie, horse-sense simplicity, Geckko. I feel much more grounded after it.

eta : crossed-post with manny, who clearly knows more about this than me.

 

[CapelDodger]

In the case of Chavez, he is very certain he will not get fired and he seems to be willing to go very near the edge.

Chavez is just another caudillo, and machismo counts for a lot in that. Sabre-rattling, willy-waving. That's not to say that Chavez's motivations aren't for the public good, it's just about the process, about expectations, his included. An intelligent, well-meaning caudillo is not necessarily a bad thing in today's Venezuela.

 

[JamesDillon]

Looking at the following charts from the Department of Energy, I would say the ambassador’s statement I highlighted is not a statement of fact. I am focusing on the word “intact” in his statement. The following charts of oil imports by country of origin, leads me to think that the US economy would not be intact. The US imports approximately 15 percent from Venezuela. Also, sifting through the Department of Energy’s web site, we find that Venezuela has produced roughly 10.4 percent of the OPEC crude between 1980 and 2004. It has been the third largest oil producing country behind Iran and Saudi Arabia.

Crude Oil and Total Petroleum Imports Top 15 Countries
http://www.eia.doe.gov/pub/oil_gas/...ons/company_level_imports/current/import.html

OPEC Crude Oil Production (Excluding Condensate), 1980-2004
http://www.eia.doe.gov/emeu/ipsr/t42.xls

I still don't understand your objection to the ambassador's statement, and I don't see what relevance the truth or falsity of the statement has to whether he should have said it. If it is true that the U.S. economy would not survive "intact" from the withdrawal of Venezuelan oil, isn't that all the more reason to play hardball with Chavez? Do you think it would strengthen America's bargaining position if our ambassador were to say, "Oh, sh#!, you're right, Mr. Chavez! The entire American economy could collapse if Venezuela withdraws its oil from our market! Please don't do that!"

 

[FreeChile]

I still don't understand your objection to the ambassador's statement, and I don't see what relevance the truth or falsity of the statement has to whether he should have said it.

From where I’m sitting all I can see is what I interpret to be inconsistent statements. So for me, it comes down to highlighting them as senseless. My take is that if you have nothing to say, say the least possible, hence the title of this thread.

Don't you find two of the statements made by the Ambassador to contradict each other? It is a simple case of putting one’s foot in the mouth. How does trade with Venezuela benefit both countries if not economically? Of course, it is possible that he did not mean it in the way I interpreted it. Perhaps, by “intact”, he meant to say that the US would live. I don’t see how he could have meant that the economy would be the same.

Ambassador William Brownfield told Venezuela's El Universal newspaper yesterday that the oil sales benefit both countries. … "The United States could survive with its economy intact without Venezuela as an oil supplier," he said.

If it is true that the U.S. economy would not survive "intact" from the withdrawal of Venezuelan oil, isn't that all the more reason to play hardball with Chavez? Do you think it would strengthen America's bargaining position if our ambassador were to say, "Oh, sh#!, you're right, Mr. Chavez! The entire American economy could collapse if Venezuela withdraws its oil from our market! Please don't do that!"

Firstly, how are the Ambassador’s statements good hardball tactics? Do they strengthen the position of the US? Also, if those were the only two possible solutions the Ambassador envisioned, I would truly think him incompetent for the job.

 

[RandFan]

There are five ladies on my road who sell cakes each week. Every week they lay out their stalls and manage to find buyers for their treats by the end of the day.

I have tended to buy mine from my next door neighbor, not because the cakes are superior, they are just closer. Until now.

I have recently fallen out with my neighbor and she is refusing to sell to me. So I have to walk a little further to buy my cakes and at first I had to pay a little more because I found myself competing against longer standing customers.

But surprisingly quickly some interesting things happened.

My new cake lady , encouraged by my additional demand and the higher prices she was securing started to bake more cakes.

The higher prices encouraged some people to buy elsewhere.

My grumpy neighbor had to drop her prices temporary to attract alternative customers.

In the end it seemed to me that nothing much had changed. Roughly the same amount of cakes are sold at pretty much the same prices. The same people buy the same amount of cakes, but some buy from different ladies.

My feud with my neighbor seems to have done nothing but cause both of us a little bit of temporary inconvenience.

I suppose I shouldn't be surprised.

I want to make certain FreeChile saw this post. I was going to post a response to his "US economy not left intact" but I couldn't do it better than this.

FreeChile, your notion that the "US economy" would not be left intact reveals a naiveté of global economies and interdependent markets. The dream of most international economies is to have America as a trading partner. We are economically strong and stable. We are the proverbial cash cow. Money talks and people selling stuff have a way of listening.

At worst there would be short term increases as the market adjusted but it really wouldn't take very long for supply and demand to works itself out. The only way Venezuela could have any significant influence would be to shut down production of oil completely. But in the end even this would only effect us for an interim period and Venezuela would be shooting itself in the foot.

 

[DanishDynamite]

Chavez is a grandstanding egomanic popularist who is an embarrasment to Venezuela. The sooner this bozo is removed from office, the better for Venezuela.

The American ambassador got it exactly right.

 

[FreeChile]

http://news.yahoo.com/s/ap/20060323/ap_on_re_la_am_ca/venezuela_us_protest

U.S. Ambassador Stranded by Chavez Rally

CARACAS, Venezuela - A raucus rally supporting leftist President Hugo Chavez stranded the U.S. ambassador and his delegation inside a social club for more than two hours Wednesday, officials said.

About 200 chanting Chavez supporters burned an American flag, set tires ablaze and blocked the gates of the Italian-Venezuelan social club during the visit by Ambassador William Brownfield to San Juan de los Morros, about 50 miles southwest of Caracas, said U.S. Embassy spokesman Brian Penn.