I think Hugo Chavez is going to run the price of gasoline in the US up to $6 a gallon, next year. Oil is not a completely fungible commodity. Refineries are optimized for a particular grade of oil, and if given that grade, produce useful product from almost 100% of each barrel. Hugo is about to get even for Bush trying to engineer "regime change" in Venezuela.
Many of the US Gulf oil refineries are optimized for Venezuelan heavy crude. Feed them something different, and they won't produce as many gallons of gasoline per barrel of crude. Word of mouth info from people working in the Industry (I'm in Houston) is that Venezuela has just concluded an agreement with Columbia to build a pipeline from their oil fields, across Columbia to a Pacific oil loading facility. The Chinese are going to fund this pipeline and build it. It won't have many environmental checks, and could be complete within a year.
I think Hugo Chavez is going to sell every barrel of oil he can to China, and reduce or eliminate exports to the US. When this happens, even if we are able to replace the Venezuelan oil with oil from another source, the refineries won't produce as much gas as before, and it's shortage city, again. Venezuelan oil in the Strategic Petroleum Reserve can substitute for the Venezuelan imports for a while, but the refineries will have to reduce production for some time to make the modifications needed to reoptimize production for another grade of crude.
The Houston Chronicle has recently reported that the Venezuelan Government has just sold the 41.25% interest it owned in a Houston-based refinery that is designed for Venezuelan crude. Citgo is the retail arm in the US for the Venezuelan Government Oil Company, but none of the stations are owned by Venezuela. They are all independently owned and operated. Earlier this year, it announced that it would stop supplying 1,800 of them. The remaining stations are able to be supplied by Citgo's remaining three refineries in the US, and Citgo no longer needs to purchase gasoline on the spot market to supply those 1,800 stations. This only reinforces the opinion I have expressed above.
If Citgo moves to sell it's remaining three US-based refineries in Corpus Christi, Tx, Lake Charles, La and Lemont, Ill; you can take my opinion, as expressed above, as fact.
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