Sun, Jun 06, 2004 - Page 11 News List

Removing Chavez may disrupt the US economy: analysts


A vote on removing Venezuelan President Hugo Chavez from office could well roil the oil-hungry US economy which is heavily dependent on the south American country's crude exports, analysts warned Friday.

Chavez agreed to respect Thursday's verdict by Venezuela's National Electoral Council that there were sufficient validated signatures on petitions for a referendum that could remove him from office.

The constitutionally mandated recall was the agreed-upon alternative to growing violence, strikes and a short-lived coup two years ago aimed at ousting Chavez. A general strike in late 2002 and early last year paralyzed Venezuela's oil sector.

"If there is another disruption to Venezuelan oil exports, the US administration would this time use the Strategic Petroleum Reserve [SPR]," said Julian Lee, an analyst at the Centre for Global Energy Studies in London.

"They would have to do that in order to make sure that there wasn't a physical shortage of oil in the United States," he said referring to the SPR, an emergency US oil stockpile.

Venezuela exports 1.34 million barrels of oil a day to the US, some 13 percent of total US crude imports, according to a March estimate by Petroleum Supply Monthly.

Washington successfully lobbied the OPEC this week to raise its output as many Americans, topping up their gas-guzzling vehicles, felt the pinch of rocketing fuel costs ahead of the fast-approaching US presidential election.

Lee said past political instability in Venezuela has had a dramatic effect on oil prices, citing the oil workers' strike in 2002 and early last year that he said added US$6 to the price of a barrel.

"This would have serious consequences" if repeated, he stressed. Confirmation of the recall vote and subsequent events could be "very unsettling," said Fadel Gheit, a New York-based oil analyst with the Oppenheimer Fund.

If the recall vote results are contested by either side, "you are going to see demonstrations and probably another strike which could bring oil exports down and that could push prices higher," Gheit explained.

He recalled prior threats from Chavez to reduce oil exports in retaliation for what he contends is Washington's interference in Venezuelan politics.

"As long as George Bush is president of the US and Hugo Chavez is the president of Venezuela, I assume the relationship between the two countries is not going to be any better," said Gheit.

Marshall Stevens, an oil trader for Refco in New York, said concern exists, but noted there had been no material impact on the Venezuelan oil industry yet.

"For the moment it doesn't look like it's going to have a material impact on oil production as was the case with the general strike early last year," he said.

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