OPEC Meeting Gives Chavez Center Stage
OPEC meetings usually are held in the Middle East or in Europe. But this year, OPEC is meeting in Caracas, Venezuela, giving Venezuelan president Hugo Chavez an opportunity to grab the spotlight. As CBS News correspondent Trish Regan reports, Chavez is pushing for cuts in oil production in hopes that energy prices move even higher than the current $70-plus per barrel.
Chavez has been dubbed Irritant-in-Chief to President Bush. His hero is none other than Cuba's Fidel Castro. Beginning on Thursday, Chavez gets his best opportunity yet to challenge the United States when he hosts the world's oil producers at an OPEC conference.
"I expect the rhetoric I expect to be flying out of President Chavez on all fronts," says John Kilduff, an oil analyst at commodities trading firm Fimat USA. "He'll make the argument that the Western economies have grown to the place they are on the back of cheap oil, and that it's time for the oil-producing countries to get their just desserts."
Venezuela could be in for a second helping: It's already home to the largest proven oil reserves in the Western Hemisphere — nearly 80 billion barrels — and there's potential to pump even more. Much more.
Elio Ohep, editor of Petroleum World Web site, says the recent run-up in petroleum prices makes the oil in Venezuela's Orinoco region, once considered too expensive to extract because it's so heavy, thick and expensive to refine, suddenly worthwhile.
"That would be huge amounts and will guarantee the world that the oil is there for the future," he says. The oil in the Orinoco region isn't profitable to get out of the ground at $20 a barrel, but at $50 a barrel, he says, it's "very commercial. You have to invest huge amounts of money, but at $50 a barrel, it's very good."
These days, oil is now hovering around $70 a barrel. Chavez will push OPEC to set $50 a barrel as the new rock-bottom price. As Venezuela's energy minister, Rafael Ramirez, told CBS News, it's not just OPEC that sets the price of oil — but world politics, too.
"The price is higher than $50 [a barrel] at the moment, and has nothing to do with OPEC and the supply market," Ramirez says.
From an American perspective, Chavez himself is one of those political dangers. His anti-U.S. rhetoric has contributed to the run-up in oil prices. At the meeting, Chavez will push OPEC to keep prices high by cutting oil production. He's unlikely to win the argument for a production cut, but he will win the world's attention — and another opportunity to irritate the United States.