Heed Hugo Chavez's Warning

Recently Venezuela's President Hugo Chavez asserted that if the United States covertly worked to destabilize Venezuela, or more specifically Chavez's authority, he would cut off his country's supply of oil to the U.S. The U.S. should take Chavez's assertion seriously because there is little doubt that the longer he remains in power the more unstable Venezuela will become. Although the U.S. has become notorious for its foreign intervention, Venezuela's destabilization will arise from Chavez's own socialist policies.

Chavez's abhorrence of capitalism and U.S. policymakers is well documented, so it is no great leap to deduce that he will blame the impending economic catastrophe in Venezuela on U.S. meddling. Chavez has instituted price controls and grabbed private property and businesses. His assault on the free-market has led to food shortages and inflation. Chavez's response to these predictable consequences has been to blame capitalists and individualists (read the United States) rather than to examine his own economic policies.

Chavez's apparent lack of comprehension of basic economics will, in the not too distant future, lead to a economically weaker Venezuela. The United States should therefore prepare for the day when Chavez cuts off oil deliveries in a vain attempt to win back support from the Venezuelan populace, who will no doubt demand an explanation for the turmoil he will have brought upon them.

Many may argue that Venezuela needs American dollars too much to cut-off their supply of oil to the United States. There are two problems with this point. First, it rests on the assumption that Chavez will be grounded by logic. Chavez has repeatedly shown that the only logic he follows is that of a tyrant. Second, it does not take into account the growing demand for oil from China, which is at the moment experiencing nationwide fuel shortages. Granted, the logistical complications of transferring Venezuelan oil supply from the U.S. to China are substantial; but one can never underestimate a motivated tyrant trying to hold on to power.

The United States currently receives about 11% of its oil from Venezuela. Any significant change in the supply of oil from Venezuela means the U.S. would either need to rely more heavily on other suppliers or find alternative energy sources. The prospects of either option becoming a desirable and feasible substitute to Venezuelan oil over a short period of time are not good. The U.S. economy would feel the effects over the loss. The CIA may be wiretapping Chavez's phone calls as we speak.