VenezuelanÂ petrotyrant Hugo Chavez has renewed his denunciations of biofuels. According to an Associated Press story dated April 26, 2008:
“Venezuelan President Hugo Chavez says a U.S. push to boost ethanol production during a world food crisis is a â€˜crime.â€™
The socialist leader says he’s concerned that so much U.S.-produced corn could be used to make biofuel, instead of feeding the world’s poor.
Chavez says the corn needed to fill an average car with ethanol would be enough to feed seven people for a year.”
Actually, since a bushel of corn yields 2.8 gallons of ethanol, the corn needed to fill a 20 gallon SUV tank is 7 bushels, which at the current market price of $5/bushel, costs a total of $35. According to Mr. Chavez, then, the cost of feeding one person for a year is $5. With oil hitting $120/barrel, Mr. Chavez’s government this year will receive about $88 billion in revenues taxed from the rest of the global economy, while the OPEC governments collectively will tax the world to the tune of $1400 billion.
(Omitted from Chavezâ€™s analysis is the fact that the ethanol program has actually stimulated corn production so much that, after the part used for ethanol is taken away, the net US corn harvest available for food and feed is up 34% since 2002. Furthermore, contrary to claims in many articles, this has not been done at the expense of soy or wheat production. In fact, U.S. soy plantings this year are expected to be up 18% to a near record of 75 million acres, wheat plantings are up 6%, and overall, US farm exports are up 23%. Much more can be produced as demand requires, since of 800 million acres of US farmland, only 280 million are actually being farmed. This is why – $5 per person per year feeding price aside – Â the entire Malthusian conceit underlying Chavezâ€™s fuel vs. food argument is nonsense.)
Chavez’s remarks reinforce those made by the Saudi Arabian oil minister in a speech made in Paris April 8, wherein he expressed his deep concern that biofuels could contribute to global warming. Chavez and the Saudi’s negative assessments of biofuels were also strongly supported by arch Malthusian Lester Brown in an op ed in the Washington Post April 22.
The fundamental unity of the Islamist, the petrotyrant, and the Malthusian positions was made clear by pro-OPEC propagandist Robert Bryce, in a debate with meÂ that aired on the Mike Medved Show April 21. (Which can be heardÂ by clicking here.)
When hard pressed, Bryce finally emerged with the following argument: Biofuels are to be shunned because they threaten to lower the price of oil, and thus encourage economic growth, particularly in the third world, and thus global warming.
So apparently we should all be thankful to OPEC, which by taxing the world economy into a recession, is doing so much to curtail uncontrolled human aspirations, while concentrating power in the hands of those who would eliminate all freedom forever.Â
A reader writes in with an example of how innumerate Chavez’ statement is:
“If the $88 billion/year Venezuelan oil revenue figure is correct (and I have no reason to suspect otherwise), then Hugo Chavez can singlehandedly end global hunger – $88 billion/$5 per person = 17.6 billion people that can be fed on Venezuelan oil revenue alone. What a humanitarian gesture that would be! And as there are only 6.6 billion people on Earth, he can still pocket $55 billion dollars for his own personal needs…”
In the coming months, Washington will roll out a strategic partnership with Brazil to expand ethanol and other biofuels usage in the hemisphere, hoping not only to bolster energy security and generate more rural jobs for poor countries but foster goodwill toward the United States, according to several people familiar with the issue.
There’s even talk that the Brazil deal could blunt the influence that Venezuela’s Bush-bashing President Hugo ChÃ¡vez exerts in the region by fomenting alternate fuels to Venezuela’s oil wealth. U.S. officials, however, deny this, noting the arrangement would have happened regardless of ChÃ¡vez.
”The United States and Brazil are the world’s two largest biofuels producers so cooperation is natural,” said Eric Watnik, a State Department spokesman. “Our goal is advance to global energy security by helping countries diversify their supply.’
Excellent. Now, if only that 54 cent a gallon tariff on ethanol imports were removed…
As the Communist Chinese and fascistic Russian regimes move to forge close relations with energy-rich nations like Iran, Libya, Sudan, Venezuela, Bolivia, Ecuador and Saudi Arabia, and as the Kremlin consolidates its control over Russia’s own vast resources, America and her allies will find themselves increasingly imperiled by their dependency on such sources for oil products and/or natural gas.
As a result, President Bush needs to make increased U.S. energy security a central part of the overhauled war-fighting strategy that he is set to announce next month. To do so, he must clearly go beyond the lip service that he paid to our “addiction to oil” in last year’s State of the Union speech by taking steps that will make a difference.
Done properly, energy security could be one of the most promising areas for cooperation between the Bush Administration and Democrats in Congress. By concentrating on areas where considerable progress is possible (rather than on such neuralgic issues as drilling in the Arctic National Wildlife Refuge or increased CAFE fuel-efficiency standards), America — and in particular its gas-guzzling transportation sector — could be made significantly less reliant on oil supplied by unstable or hostile regimes.
Such a course of action has been laid out in a blueprint produced by the Set America Free Coalition — a group spanning the political spectrum — that forms the basis for the bipartisan, bicameral Vehicle & Fuel Choices for American Security Act (introduced in the last session of Congress as S.2025 in the Senate and H.R. 4409 in the House). It entails two principal steps: (1) ensuring all cars sold in America will be Flexible Fuel Vehicles, capable of burning not just gasoline but ethanol and methanol (or some combination thereof); and (2) assuring the availability of substantially increased quantities of such alternative fuels.
This legislation would also help make electricity a true transportation fuel, by promoting the manufacture of plug-in hybrid vehicles. Since scarcely any electricity is generated in America by burning oil, the widespread use of such vehicles could greatly reduce our dependence on foreign sources of petroleum. To realize the full potential of this option, however, President Bush and the Congress will need to join forces on one other important initiative: assuring large-scale U.S. production of advanced lithium ion batteries, an essential ingredient for our future energy — and national — security and the competitiveness of our auto industry.
The war of words between Venezuela and the United States reached new heights last month, when Venezuelan President Hugo Chavez called U.S. President George Bush “the devil” and a “world dictator” in an address to the United Nations General Assembly. But, despite escalating diplomatic tensions, the United States remains Venezuela’s Number-One oil customer, a commercial relationship that appears likely to endure.
[...]“During the Arab oil embargo in the ’70s, we [the United States] imported 30 percent of our oil. Today, we import over 60 percent. And that dependence is growing,” commentedÂ Anne Korin, whoÂ co-directs the Institute for the Analysis of Global Security in Washington.Â “And it causes us to be dependent on regimes that we do not like, that do not like us, whose values are very different from our own. And it causes us to be forced to make compromises, in terms of how we would like to deal with certain countries.”
Anyone who thinks the oil market is free should read the following Wall Street Journal article very carefully.Â Does Venezuela’s national oil company PDVSA, now run byÂ foaming-at-the-mouth dictator Hugo Chavez, Â sound like a company run according to free market principles?Â
“Since Mr. ChÃ¡vez took power in 1999, he has become PDVSA’s de facto CEO, steering the oil company into political, economic and philanthropic ventures that have distracted it from its core business of finding and producing more oil. The consequences for PDVSA are stark: Output has fallen to an estimated 1.6 million barrels a day from nearly 3 million barrels in 1998.
“The oil company, the world’s third-biggest by most measures, is run along social and political guidelines as much as business tenets. As a result, much of the decision-making involves figuring out new ways to fund Mr. ChÃ¡vez’s pet projects. One of the latest ventures was paying to televise soccer’s World Cup for free in Bolivia, a ChÃ¡vez ally.
“Mr. ChÃ¡vez’s geopolitical considerations, and his anti-American bent, also influence the way the company does business. PDVSA has turned away from traditional partners like U.S. major Exxon Mobil Corp. and is doing much more business with state companies from Iran, China and India. This weekend, during a visit to Tehran by Mr. ChÃ¡vez, Iran pledged to invest $4 billion in two Venezuelan oil fields. The two nations also unveiled a raft of joint ventures, including a refinery in Indonesia.
“[...] Nowhere has the company’s decay turned up faster than at PDVSA’s massive 1.3 million-barrel-a-day domestic refining network, which suffered more than a dozen plant outages in 2005. In March, two workers died in a blast at the Amuay refinery, the nation’s largest. Last month, another explosion and subsequent fire caused extensive damage at a 190,000-barrel-a-day unit at Amuay, sending spot gasoline prices higher in the U.S. Gulf Coast where Amuay ships much of its production.”
The consequences to the global market are not at all trivial:Â “The company’s diminished production has cut world output by more than 1%. That may not sound like a lot, but in a global oil market stretched tight by growing demand, political volatility and hard-to-expand supply, the company’s production shortfall has contributed to the run-up in oil prices during the past few years, and is likely to continue to do so.”
“Take away the $300-500 billion in windfall profits piled up in the coffers of the oil-exporting nations recently, and Hugo Chavez becomes just another spluttering Castro, hardly able to pay for his bankrupt populism in Venezuela, much less export it beyond his borders. Without petroleum largesse, Iran’s Mohammed Ahmadinejad could afford neither a multi-billion-dollar nuclear weapons program nor costly subsidies for terrorist groups like Hezbollah and Hamas. Vladimir Putin’s crackdown on capitalists, political freedom, and further Russian reforms comes only because he controls energy exports vital to the world economy.
“And huge petroleum profits don’t just empower dictators, subsidize nuclear proliferation, and curtail economic reform. They also have pernicious psychological effects. Americans hit with gasoline price hikes of nearly a dollar a gallon have fallen to despairing over our economy. Try telling furious motorists that the extra cost for most drivers amounts only to about $500-700 per year–a pittance compared to sky-high housing prices that leap tens of thousands of dollars annually. No matter: people see the numbers on the gas pump, and less cash in their wallets, and figure the U.S. is teetering on the brink.
“Foreign policy is warped as well. Because of its dependency on Middle East gas and oil, Europe’s high talk about human rights doesn’t apply much to Arab extremists with energy-rich patrons in the Gulf. America is in a war against Islamic fascism, yet treads carefully around Saudi Arabia, despite the kingdomÍ³ subsidies to America-hating madrasahs. When poor oil-importing countries in Africa and Latin America make sacrifices to enact tough market reforms, their hard work only helps to enrich failed states like Iran, Libya, and Venezuela lucky enough to have an accidental resource beneath their feet that was found, exploited, and mostly purchased by the Westerners they demonize.”