The Rising Influence of Rising Affluence

[Democritus_of_Abdera]

Fact check: Venezuelan oil import ban…

I had made the parenthetical statement that Venezuelan oil imports to the US has been declining rapidly in recent months… (#msg-133114324). This statement does not stand when the facts are examined (i.e. see: https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MTTIMUSVE1&f=M ). My only excuse was that I was parroting what I had read somewhere (a reference I can no longer locate). There has been a decrease of imports over the past several years, but it has not accelerated in recent months.

A recent report by Alex Nussbaum et al in Bloomberg (July 18) gives a more detailed analysis of the impact of an abrupt ban of Venezuelan oil upon US oil companies. Selected quotes:

https://www.bloomberg.com/news/articles/2017-07-19/who-d-lose-most-from-u-s-ban-on-venezuela-crude-quicktake-q-a

Gulf Coast refiners including Valero Energy, Chevron Corp. and Phillips 66 have spent millions tailoring their plants to use Venezuela’s unique brand of heavy, tar-like crude.

Gasoline and diesel prices would rise, but the impact would likely be temporary, said Andy Lipow of Lipow Oil Associates LLC, an industry consultant in Houston. Until an alternate supply is on line, a ban on Venezuela "might increase costs for some refineries, and they may or may not be able to pass that on to gasoline prices," Lipow said in a telephone interview. The American Fuel & Petrochemical Manufacturers, an industry trade group, argued in a July 6 letter that sanctions could have “a significant negative effect on U.S. refiners, consumers and our nation’s economy."

Canada’s tar-sands are among the closest analogues to Venezuela’s heavy crude and would be among the first options for U.S. importers, analysts said. Mexico, Colombia and the Gulf of Mexico are also probable sources of replacement crude. Over time, refineries could also turn to Saudi Arabia, Iraq and Kuwait for supplies, Lipow said, although they’d come with higher costs.

Oil exports are crucial to keeping Venezuela even marginally afloat, as they account for a majority of the government’s revenues. Members of the U.S. National Security Council therefore view limits on Venezuelan crude imports as a potent weapon, said Joe McMonigle, a senior energy policy analyst at HedgeEye Research and former chief of staff at the Energy Department.