Left: Chavez with Bolivian President Morales
(Caracas, Venezuela) Venezuelan President Hugo Chavez said Sunday night that the country would impose a new tax on corporations that extract oil to increase revenues from its petroleum industry. The move is expected to raise at elast $1 billion in new revenues for Venezuela.
"We are going to create a new oil tax, called the tax on extraction," said Chavez. "The companies that are pumping oil in Venezuela are making a lot of money."
Chavez said that Venezuela also plans to raise income taxes to 50 percent from 34 percent for the largest oil companies operating along the Orinoco River, while raising taxes on natural gas firms that operate in the country.
The companies operating in the country's Faja ("heavy- oil") region- Exxon-Mobil, Chevron, ConocoPhillips, Total BP, and Statoil ASA - produce about 600,000 barrels of synthetic crude oil a day. This is transported to the coast where it is refined before being exported.
Chavez also praised the decision by Bolivian President Evo Morales to nationalize his country's natural gas and oil industries.
"Hopefully, all Bolivians will understand that this is vital for Bolivia's future, just like what we are doing is vital for the future of Venezuela," Chavez said.
It appears that nations in the Western Hemisphere are calculating that the United States possesses neither the will nor the means to back up its traditional hemispheric hegemony with military force. This lack of a credible military threat, coupled with increasing global demand for ever more scarce oil reserves, will continue to prompt more nations to test the patience limits of US leaders.
Chavez knows that he can turn off the spigots and cause a significant disruption to the US economy, as Venezuela is the world's fifth-largest oil producer. He also likely believes that Venezuela could ride out a temporary cessation of production better than could the US.