The Dastardly Are Even Sometimes Right

Venezuela’s Chavez predicts oil could reach $200 a barrel — South Florida Sun-Sentinel.com

CARACAS, Venezuela – Venezuelan President Hugo Chavez says he expects oil prices to keep climbing and predicts they could reach $200 a barrel.

It isn’t the first time the Venezuelan leader has mentioned that benchmark– though he hasn’t said when it might be reached.

Chavez reiterated the prediction after the price of light, sweet crude continued to rise on the New York Mercantile Exchange and settled at $136.38 a barrel Wednesday.

Chavez said in a televised speech Wednesday that oil should be $100 a barrel, but could keep rising to $200.

He blamed the falling U.S. dollar [1], U.S. “threats” against Iran [2], and what he called “bad management” of the U.S. economy for driving rising prices [3].

I’m not a big fan of the guy, and was happy when his “dictator-for-life-vote[!?]” failed [full story].

However, he is very correct about [1].  As the dollar falls, imports cost more.  We import oil. Lather, rinse, repeat, get raped at pump.

He is also right about [2].  If we invade Iran, or even start bombing them, and they [a] gum up the Straight of Hormuz and [b] stop pumping gas, the world will run like an engine without oil.  This would be bad. and the very threat of it helps to push up the prices of oil in the future (which is the price everyone talks about).

On [3] it’s more of a toss-up.  I do think the Bush Administration has mis-managed the economy and done a number of things to exacerbate the economic disparity here.  I’m not sure how much that has to do with the price of oil, except that it tears the heart out of the working class, which hurts productivity, which hurts the economy, which causes the dollar to fall, which makes oil more expensive.