Friday, 1 February 2019

Must-read article by the Saker on Venezuela

A brilliant article from the Saker1

The US aggression against Venezuela as a diagnostic tool

Saker drawing from community
31 January, 2019


The Neocons never cease to amaze me and their latest stunt with Venezuela falls into this bizarre category of events which are both absolutely unthinkable and simultaneously absolutely predictable.  This apparent logical contradiction is the direct result of a worldview and mindset which is, I believe, unique to the Neocons: a mix of imperial hubris and infinite arrogance, a complete lack of decency, a total contempt for the rest of mankind, crass ignorance, a narcissist/sociopath’s inability to have any kind of empathy or imagine another guy’s reaction and, finally, last but most certainly not least, crass stupidity.  There is so much which can be said about the latest US aggression on Venezuela that entire books could be (and will be) written about this, but I want to begin by look at a few specific but nonetheless very symptomatic aspects:

In your face” stupidity or bootcamp-like deliberate public humiliation?

Remember the almost universal reaction of horror when Bolton was appointed as National Security Advisor?  Well, apparently, either the Neocons completely missed that, which I doubt, or they did what they always do and decided to double-down by retrieving Elliott Abrams from storage and appointing him US Special Envoy to Venezuela.  I mean, yes, of course, the Neocons are stupid and sociopathic enough not to ever care about others, but in this case I think that we are dealing with a “Skripal tactic”: do something so ridiculously stupid and offensive that it places all your vassals before a stark choice: either submit and pretend like you did not notice or, alternatively, dare to say something and face with wrath of Uncle Shmuel (the Neocon’s version of Uncle Sam).  And it worked, in the name of “solidarity” or whatever else, the most faithful lackeys of the Empire immediate fell in line behind the latest US aggression against a sovereign nation in spite of the self-evident fact that this aggression violates every letter of the most sacred principles of international law.  This is exactly the same tactic as when they make you clean toilets with a toothbrush or do push-ups in the mud during basic training: not only to condition you to total obedience, but to make you publicly give up any semblance of dignity.
MAGA? really?

This is not just a case of history repeating itself like a farce, however.  It is hard to overstate how totally offensive a character like Elliott Abrams is for every Latin American who remembers the bloody US debacle in Nicaragua.  US vassals now have to give up any type of pretend-dignity in front of their own people and act as if Abrams was a respectable and sane human being.
I believe that this kind of “obedience conditioning by means of humiliation” is not just a case of the Neocons being idiots, but a deliberate tactic which will, of course, backfire and end up hurting US puppets worldwide (just like the pro-US Russian “liberal” opposition was eviscerated as a result of being associated by the Russian public opinion with the US policies against Russia, especially in the Ukraine).
Finally, these appointments also show that the senior-Neocons are frightened and paranoid as there are still plenty of very sharp junior-Neocon folks to chose from in the USA, yet they felt the need to get Abrams from conservation and place him in a key position in spite of the strong smell of naphthalene emanating from him.  This reminds me of the gerontocrats of the Soviet Politburo in the worst stagnation years who had to appoint the likes of Chernenko to top positions.
The one thing the Mr MAGA’s administration has in common with the late Brezhevian Politburo is its total inability to get anything done. My wife refers to the folks in the White House (since Dubya came to power) as the “gang that couldn’t shoot straight” and she is right (she always is!): they just can’t really get anything done anymore – all their half-assed pseudo-successes are inevitably followed by embarrassing failures.
As I wrote in my article “The good news about the Trump Presidency: stupid can be good!” these folks will only precipitate the collapse of the AngloZionist Empire, which is a very good thing.  The bad thing is, of course, that the Neocons are negating any chance for a gradual, phased, collapse and are, instead, creating a dynamic in which a sudden, catastrophic, collapse becomes much more likely.
Now we have all seen the latest antic from Bolton: showing up with a yellow pad with “5,000 troops to Colombia” written on it.  Again, this might be a case of Bolton being senile or not giving a damn, but I doubt it.  I think that this is just another oh-so-subtle way to threaten Venezuela with a US-led invasion.  And, really, why not?
If the Empire thinks it has the authority and power to decide who the President of Venezuela should be, it has to logically back up this stance with a threat, especially since there is no US authority, moral or otherwise, left.
The obvious question here is how this threat will be received in Venezuela and that largely depends on how credible that threat is.  Now, “5,000 troops” could mean anything, ranging from a infantry brigade combat team to the typical US mix of as many putatively “special” forces as possible (to make every service happy and give everybody a piece of the expected (but never achieved) “victory pie” – many careers in the US depend on that kind of stuff).  At this point in time, I rather not speculate and get technical about how such a force could be structured.  Let’s just assume that it will be an overall credible and well-packaged force and try to speculate how the Venezuelans could react to it.

The state of the Venezuelan military


Here I am particularly lucky as I have a close and trusted Latin American friend who is now a retired Lt-Colonel who spent many months in Venezuela working with the Venezuelan military in a capacity which I cannot disclose, but which gave him quasi-total access to every unit and military facility in the country and who, just a couple of years ago, shared with me his impression of the Venezuelan military.  Here is what he told me:
A military, any military, is always the product of the society which produces it and this is also true of Venezuela.  It would be silly to admit that the Venezuelan economy is a total mess while expecting the Venezuelan armed forces to be a shining example of professionalism, honesty and patriotism.  The sad reality is very different.
For one thing, much of the Venezuelan military is hopelessly corrupt, as is the rest of society.  In a country whose economy is imploding, this is hardly surprising.  Furthermore, for years both Chavez and Maduro have fought an uphill battle to remove as many potential traitors and class enemies (in a Marxist sense of the word) from the Venezuelan military and replace them with “socially close” (a Bolshevik concept) elements from the poorer sections of society.  Truth be told, this was a partially successful strategy as seen by the fact that during this latest coup attempt the Venezuelan military overwhelmingly supported the Venezuelan Constitution and the legitimacy of Maduro.  And yet that kind of loyalty often comes at the costs of professionalism and at the risk of corruption as seen by the case of the Venezuelan military attache to the USA who clearly was a US agent.  I am afraid that the current situation in Venezuela might be similar to what it was in Syria in the very early stages of the AngloZionist war against this country when scores of top officials of the Syrian government proved to be traitors and/or US agents.  In Syria the government eventually re-took control of the situation, but only with a great deal of help from Iran and Russia and after almost being toppled by the US-run Takfiri forces.
The good news here, according to my friend, is that the Venezuelan special forces (army special forces, jungle infantry troops, “Caribe” counter insurgency units, airborne units, etc) are in a much better shape and that they could form the core of a resistance force to the invasion, not unlike what the Republican Guard eventually did in Iraq.  But the biggest difference with Iraq is that in Venezuela the majority of the people are still backing Maduro and that any invasion force should expect to meet a lot of resistance of the type which the US encountered in Iraq after the invasion of the country.  Also, there was a fragile truce of sorts between Hugo Chavez and various Left-wing guerillas who agreed to stop their military operations, but who also kept all their weapons “just in case”.  This “case” has now happened and we can expect that any US invasion will trigger an immediate re-emergence of a Left-wing guerilla force which, combined with popular support and the key role of a core of patriotic Venezuelan special forces could form a very dangerous combination, especially in the mid to long term.
Keep in mind that corrupt officers don’t like combat and that while they might aid a US invasion force, they will only do so as long as things seem to go the easy way, but as soon as things go south (which is what always happens to US invasion forces) they will run as fast as they can.  So while the endemic corruption now will be a problem for the Maduro government, it will become a problem for the US as soon the legitimate government is toppled.
Comparisons are necessarily tricky and crude, but with this caveat in mind, don’t think “Syria” but rather think “Iraq” when considering the possible outcomes of a US invasion.

The state of the Venezuelan people


This is really crucial.  Hugo Chavez’ reforms alienated a lot of Venezuelans, especially those who made their fortunes by servicing US interests and who became your typical Latin American version of a comprador class.  Much of the middle-class also got hurt and are angry.  However, these same reforms also empowered huge numbers of destitute and poor Venezuelans who, for the first time, felt that the government stood for their interests and who remember what it was like to live in abject poverty under a US-backed regime.  These folks probably have no illusion about what the toppling of this government would mean for them and they are likely to fight hard, if not necessarily competently, to keep the little rights and means they acquired during the Chavez years.  There is even what is sometimes referred to “Chavistas without Chavez” which some describe as potential back-stabbing traitors while other see them as more pragmatic, less ideological, faction of Chavez supporters who decry Chavez’ mistakes but don’t want their country to turn into a Colombia-style US colony. Whatever may be the case, Hugo Chavez’ pro-popular policies left a very profound mark on the country and you can expect that a lot of Venezuelans will take up arms and resist any US/Colombian invasion.
Would *you* trust that face?

Here I think we can all express our heartfelt gratitude to Mr MAGA whose appointment of Elliott “Iran-Contra” Abrams has done more than any government sponsored propaganda to clearly and bluntly explain to the Venezuelan people who is doing what to them and why.
Seriously, Ron Paul or Tulsi Gabbard speaking of democracy is one thing, but having gangsters and psychopathic thugs like Pompeo, Bolton or Abrams in charge really sends a message and that message is that we are dealing with a banal case of highway robbery triggered by two very crude considerations:
  • First, to re-take control of Venezuela’s immense natural resources.
  • Second, to prove to the world that Uncle Shmuel can still, quote, “pick up some small crappy little country and throw it against the wall, just to show the world we mean business“, unquote.
The obvious problem is that 1) nobody takes the US seriously because 2) the US has not been capable of defeating any country capable of resistance since many decades already.  The various US special forces, which would typically spearhead any invasion, have an especially appalling record of abject failures every time they stop posing for cameras and have to engage in real combat.  I assure you that nobody in the Venezuelan military cares about movies like “Rambo” or “Delta Force” while they carefully studied US FUBARs in Somalia, Grenada, Iran and elsewhere.  You can also bet that the Cubans, who have had many years of experience dealing with the (very competent) South African special forces in Angola and elsewhere will share their experience with their Venezuelan colleagues.
Last but not least, there are a lot of weapons in circulation in Venezuela and which the various popular militias and National Guard would be more than happy to further distribute to the local population if any invasion appears to be successful.

The State of the Empire and its puppet-President Macrobama


Well, here the famous “insanity is repeating the same thing over and over again expecting different results” is the best possible description of US actions.  Just look at this sequence:
President Macrobama?
Does all this not look boringly familiar?
Does this bizarre mix of Neocons, gerontocrats and deepstaters really, sincerely, believe that this time around they will “win” (however you define that)?!
More relevantly – has this recipe ever worked in the past?  I would say that if we accept, for argument’s sake, that the goal is to “restore democracy” then obviously “no”.  But if the goal is to wreck a country, then it has worked, quite a few times indeed.

Next, a few misplaced hopes


I am getting a lot of emails suggesting that Russia might do in Venezuela what she did in Syria.  Let me immediately tell you that this is not going to happen.  Yes, there are a lot of Russians in Venezuela, but the “Russians are not coming”. For one thing, I will never cease to repeat that the Russian intervention in Syria was a very small one, and that even if this small force proved formidable, it was really acting primarily as a force multiplier for the Iranians, Hezbollah and the Syrian government forces.  And yet, even the deployment of this very small force necessitated a huge logistics effort from Russia whose military (being a purely defensive one) is simply not structured for long-distance power projection.  Syria is about 1000km from Russia.  Venezuela is about 10 times (!) further.  Yes, I know,a few Tu-160 visited the country twice now and there are Russian advisors in the country and the Venezuelans have a few pretty good Russian weapons systems.  But here, again, this is a game of numbers.  Limited numbers of Russian-made combat aircraft (fixed and rotary wing), air defense missiles or even large numbers of advanced MANPADs or assault rifles won’t do the trick against a determined US-Colombian invasion.  Finally, there is no Venezuelan equivalent to Iran or Hezbollah (an outside ally and friend) which would be capable and willing to deploy real combat forces for actual, sustained combat against the invader.
Next comes terrain.  Yes, much of Venezuela is difficult to access, but not for jungle-experienced forces which both the US military and the Colombians have.  Furthermore, there is absolutely no need to invade the entire country to topple the legitimate government.  For that all you need is to control is a few key facilities in a few key locations and you are done.  For example, I don’t see the USAF or USN wasting any time in air-to-air combat against the (few) Venezuelan Sukhois – they will simply destroy them in their hangars along with their runways and air combat management radars and command posts.  So the terrain will not prevent the Empire of suppressing Venezuelan air defenses and as soon as this is done, you can expect the usual mix of bomb and missile strikes which will create chaos, wreck command and control capabilities and, basically, disorganize much of the military.  Finally, US forces in Colombia and USN ships off the Venezuelan coast will enjoy a safe harbor from which to launch as many strikes as they want.
Next, hopes that Russia and China will somehow resuscitate the Venezuelan economy are also ill-founded.  First, neither country is interested in pouring money into a bottomless pit.  It is one thing to sign contracts which are likely to eventually produce a return on investment and quite another to dump money into a bottomless pit (as the US and Europe have found out in the Ukraine).  Second, the Venezuelan economy is so deeply enmeshed in the US-UK run international financial system that neither China nor Russia can do anything about it.  That is not to say that US sanctions, subversion and sabotage did not play a major role in the collapse of the Venezuelan economy, they sure did, but it is equally true (at least to Russian specialists) that many of the Chavista reforms were botched, a lot of them were a case of too little too late, and that it will take years to refloat the Venezuelan economy.
Finally, we are comparing apples to oranges here: the task of the AngloZionists is to destroy the Venezuelan economy while the Chinese and Russian task would be, at least in theory, to rescue it.  Destroying is so much easier than building, that the entire comparison is logically flawed and fundamentally unfair.
I really mean no offense to the supporters of Hugo Chavez and his ideals (I very much include myself in this category) but anybody who has been to, or near, Venezuela will tell you that destitute Venezuelans are not only running out of the country in large numbers, but they also contribute to destabilize the neighboring states.  So we should have no Pollyannish notions about all the reports about the economic and social collapse in Venezuela as only “US propaganda”.  Sadly, much of it is true even if often exaggerated, lopsided and missing all the very real successes of the Chavez reforms, hence the continuous popular support, in spite of it all, the Maduro government continues to enjoy.  Still, the overall picture is very bleak and it will take Venezuela consistent and correct action to recover from the current plight.

So is there still hope?  Yes, absolutely!

I recently replied the following to a friend asking me about a possible Russian intervention in Venezuela “I place my own hopes not in the Venezuelan military, or in Chinese or Russian help, but on the amazing ability of the US Americans to f*** up.  At the end of the day, that is our biggest ally: the US stupidity, ignorance, arrogance and cowardice“.
Think of what currently passes as a “policy” of the USA in Venezuela as a diagnostic tool.
Not just to diagnose the moral degeneracy and mental pathology of the leaders of the AngloZionist Empire, but also to diagnose the very real state of despair and chaos of the Empire itself.  Under Obama, for all his faults and weaknesses, the US succeeded in subverting a list of crucial Latin American countries (like Brazil or Argentina) but now, with Mr MAGA, it can’t even do that.  The kind of antics we see from the Pompeo, Bolton & Abrams gang is amazing in its crudeness and, frankly, makes a supposed “indispensable nation” look absolutely ridiculous.  These losers already had to fold several times, in spite of equally hyperbolic threats delivered with maximal gravitas (think DPRK here), and yet they still think that crude bullying methods can yield success.  They can’t.  Immense firepower is not a substitute for brains.
In its short and blood-soaked history, the USA has pretty much always acted like some criminal enterprise run by brutal gangsters, but in the past some of these gangsters could be extremely well educated and intelligent (think James Baker here).  Today, their guns are still lying around (albeit in various states of disrepair), but they are wielded by ignorant retards.  Yes, ignorant retards with guns can be very dangerous, but they can never be effective!

Conclusion

Right now the US, backed by its various colonies and vassal states, appears to be ready to deliver a death blow to Venezuela and, truth be told, they might be able to do just that.  But, for whatever it is worth, my gut feeling is that they will fail again, even against the weakest countries of the Axis of Resistance.  That is not to say that Venezuela is not in a heap of critical problems.  But I believe that in spite of being in a critical condition, Venezuela will be able to bounce back, just like Syria did.  After all, the Syrian example proves that it *is* possible to resist a superior invading force while at the same time successfully engaging in critically needed reforms.  Yes, today’s Caracas is in very bad shape, but the city of Aleppo was in a much worse shape until it was liberated, and now quasi-normal life has returned to it (in sharp contrast to the US liberated devastated city of Raqqa which still lies in ruins).  Yankees (to use the usual Latin-American expression) are just like their Israeli overlords: they are capable of devastating violence but they have no staying power: if things don’t go their way fast, really fast, they run and barricade themselves somewhere faraway from danger.  In our case, they might even do what they did in Iraq and Afghanistan: build obscenely huge embassies, create a special zone around them, and sit tight while the country is engulfed in a bloody civil war.  This way, they can provide CNN & Co. with footage of a “peaceful neighborhood” while still claiming that the Stars and Strips are still proudly flying high over the enemy’s capital and that “these colors don’t run”.  This would be a disastrous outcome for the Venezuelan nation and this is why we all have to try to prevent this, by speaking out before the US further wrecks yet another country.
Hopefully the memory of past completely failed, humiliating and bloody invasions will convince the right people at the Pentagon to do whatever it takes to prevent the US from launching yet another stupid and immoral war of choice on behalf of the Neocons.
The Saker

Much-needed context on Venezuela

Venezuela’s collapse is a window into how the Oil Age will unravel

By Nafeez Ahmed


31 January, 2019

For some, the crisis in Venezuela is all about the endemic corruption of Nicolás Maduro, continuing the broken legacy of Chavez’s ideological experiment in socialism under the mounting insidious influence of Putin. For others, it’s all about the ongoing counter-democratic meddling of the United States, which has for years wanted to bring Venezuela — with its huge oil reserves — back into the orbit of American power, and is now interfering again to undermine a democratically elected leader in Latin America.
Neither side truly understands the real driving force behind the collapse of Venezuela: we have moved into the twilight of the Age of Oil.
So how does a country like Venezuela with the largest reserves of crude oil in the world end up incapable of developing them? While various elements of socialism, corruption and neoliberal capitalism are all implicated in various ways, what no one’s talking about — especially the global oil industry — is that over the last decade, we’ve shifted into a new era. The world has moved from largely extracting cheap, easy crude, to becoming increasingly dependent on unconventional forms of oil and gas that are much more difficult and expensive to produce.
Oil isn’t running out, in fact, it’s everywhere — we’ve more than enough to fry the planet. But as the easy, cheap stuff has plateaued, production costs have soared. And as a consequence the most expensive oil to produce has become increasingly unprofitable.
In a country like Venezuela, emerging from a history of US interference, plagued by internal economic mismanagement, combined with external intensifying pressure from US sanctions, this decline in profitability became fatal.
Since Hugo Chavez’s election in 1999, the US has continued to explore numerous ways to interfere in and undermine his socialist government. This is consistent with the track record of US overt and covert interventionism across Latin America, which has sought to overthrow democratically elected governments which undermine US interests in the region, supported right-wing autocratic regimes, and funded, trained and armed far-right death squads complicit in wantonly massacring hundreds of thousands of people.
For all the triumphant moralising in parts of the Western media about the failures of Venezuela’s socialist experiment, there has been little reflection on the role of this horrific counter-democratic US foreign policy in paving the way for a populist hunger for nationalist and independent alternatives to US-backed cronyism.

Before Chavez

Venezuela used to be a dream US ally, model free-market economy, and a major oil producer. With the largest reserves of crude oil in the world, the conventional narrative is that its current implosion can only be due to colossal mismanagement of its domestic resources.
Described back in 1990 by the New York Times as “one of Latin America’s oldest and most stable democracies”, the newspaper of record predicted that, thanks to the geopolitical volatility of the Middle East, Venezuela “is poised to play a newly prominent role in the United States energy scene well into the 1990's”. At the time, Venezuelan oil production was helping to “offset the shortage caused by the embargo of oil from Iraq and Kuwait” amidst higher oil prices triggered by the simmering conflict.
But the NYT had camouflaged a deepening economic crisis. As noted by leading expert on Latin America, Javier Corrales, in ReVista: Harvard Review of Latin America, Venezuela had never recovered from currency and debt crises it had experienced in the 1980s. Economic chaos continued well into the 1990s, just as the Times had celebrated the market economy’s friendship with the US, explained Corrales: “Inflation remained indomitable and among the highest in the region, economic growth continued to be volatile and oil-dependent, growth per capita stagnated, unemployment rates surged, and public sector deficits endured despite continuous spending cutbacks.”
Prior to the ascension of Chavez, the entrenched party-political system so applauded by the US, and courted by international institutions like the IMF, was essentially crumbling. “According to a recent report by Data Information Resources to the Venezuelan-American Chamber of Commerce, in the last 25 years the share of household income spent on food has shot up to 72 percent, from 28 percent,” lamented the New York Times in 1996. “The middle class has shrunk by a third. An estimated 53 percent of jobs are now classified as ‘informal’ — in the underground economy — as compared with 33 percent in the late 1970's”.
The NYT piece cynically put all the blame for the deepening crisis on “government largesse” and interventionism in the economy. But even here, within the subtext the paper acknowledged a historical backdrop of consistent IMF-backed austerity measures. According to the NYT, even the ostensibly anti-austerity president Rafael Caldera — who had promised more “state-financed populism” as an antidote to years of IMF-wrought austerity — ended up “negotiating for a $3 billion loan from the IMF” along with “a second loan of undisclosed size to ease the social impact of any hardships imposed by an IMF agreement.”
So it is convenient that today’s loud and self-righteous moral denunciations of Maduro ignore the instrumental role played by US efforts to impose market fundamentalism in wreaking economic and social havoc across Venezuelan society. Of course, outside the fanatical echo chambers of the Trump White House and the likes of the New York Times, the devastating impact of US-backed World Bank and IMF austerity measures is well-documented among serious economists.
In a paper for the London School of Economics, development economist Professor Jonathan DiJohn of the UN Research Institute for Social Development found that US-backed economic “liberalisation not only failed to revive private investment and economic growth, but also contributed to a worsening of the factorial distribution of income, which contributed to growing polarisation of politics.”
Neoliberal reforms further compounded already existing centralised nepotistic political structures vulnerable to corruption. Far from strengthening the state, they led to a collapse in the state’s regulative power. Analysts who hark back to a Venezuelan free market golden age ignore the fact that far from reducing corruption, “financial deregulation, large-scale privatisations, and private monopolies create[d] large rents, and thus rent-seeking/corruption opportunities.”
Instead of leading to meaningful economic reforms, neoliberalisation stymied genuine reform and entrenched elite power. And this is precisely how the West helped create the Chavez it loves to hate. In the words of Corrales in the Harvard Review:
“… economic collapse and party system collapse — are intimately related. Venezuela’s repeated failure to reform its economy made existing politicians increasingly unpopular, who in turn responded by privileging populist policies over real reforms. The result was a vicious cycle of economic and political party decay, ultimately paving the way for the rise of Chavez.”

Dead oil

While it is now fashionable to blame the collapse of the Venezuelan oil industry solely on Chavez’s socialism, Caldera’s privatisation of the oil sector was unable to forestall the decline in oil production, which peaked in 1997 at around 3.5 million barrels a day. By 1999, Chavez’s first actual year in office, production had already dropped dramatically by around 30 percent.
A deeper look reveals that the causes of Venezuela’s oil problems are slightly more complicated than the ‘Chávez killed it’ meme. Since peaking around 1997, Venezuelan oil production has declined over the last two decades, but in recent years has experienced a precipitous fall. There can be little doubt that serious mismanagement in the oil industry has played a role in this decline. However, there is a fundamental driver other than mismanagement which the press has consistently ignored in reporting on Venezuala’s current crisis: the increasingly fraught economics of oil.
The vast bulk of Venezuela’s oil is not conventional crude, but unconventional “heavy oil”, a highly viscous liquid that requires unconventional techniques to extract and flow, often with heat from steam, and/or mixing it with lighter forms of crude in the refining process. Heavy oil thus has a higher cost of extraction than normal crude, and a lower market price due to the refining difficulties. In theory, heavy oil can be produced at below break-even prices to a profit, but greater investment is still needed to get to that point.
The higher costs of extraction and refining have played a key role in making Venezuela’s oil production efforts increasingly unprofitable and unsustainable. When oil prices were at their height between 2005 and 2008, Venezuela was able to weather the inefficiencies and mismanagement in its oil industry due to much higher profits thanks to prices between $100 and $150 a barrel. Global oil prices were spiking as global conventional crude oil production began to plateau, causing an increasing shift to unconventional sources.
That global shift did not mean that oil was running out, but that we were moving deeper into dependence on more difficult and expensive forms of unconventional oil and gas. The shift can be best understood through the concept of Energy Return on Investment (EROI), pioneered principally by the State University of New York environmental scientist Professor Charles Hall, a ratio which measures how much energy is used to extract a particular quantity of energy from any resource. Hall has shown that as we are consuming ever larger quantities of energy, we are using more and more energy to do so, leaving less ‘surplus energy’ at the end to underpin social and economic activity.
This creates a counter-intuitive dynamic — even as production soars, the quality of the energy we are producing declines, its costs are higher, industry profits are squeezed, and the surplus available to sustain continued economic growth dwindles. As the surplus energy available to sustain economic growth is squeezed, in real terms the biophysical capacity of the economy to continue buying the very oil being produced reduces. Economic recession (partly induced by the previous era of oil price spikes) interacts with the lack of affordability of oil, leading the market price to collapse.
That in turn renders the most expensive unconventional oil and gas projects potentially unprofitable, unless they can find ways to cover their losses through external subsidies of some kind, such as government grants or extended lines of credit. And this is the key difference between Venezuela and countries like the US and Canada, where extremely low EROI levels for production have been sustained largely through massive multi-billion dollar loans — fuelling an energy boom that is likely to come to a catastrophic endwhen the debt-turkey comes home to roost.
It’s all a bit reminiscent of the dot-com bubble of the late 1990s, when internet companies were valued on the number of eyeballs they attracted, not on the profits they were likely to make,” wrote Bethany McLean recently (once again in the New York Times), a US journalist well-known for her work on the Enron collapse. “As long as investors were willing to believe that profits were coming, it all worked — until it didn’t.”
A number of scientists have previously estimated the EROI of heavy oil production to amount to around 9:1 (with room for variation up or down depending on how inputs are accounted for and calculated; the unfashionable but probably more accurate approach would be downwards, closer to 6:1 when both direct and indirect energy costs are considered). Compare this to the EROI of about 20:1 for conventional crude prior to 2000, which gives an indication of the challenge Venezuela faced — which unlike the US and Canada, had emerged into the Chavez era from a history of neoliberal devastation and debt-expansion that already made further investments or subsidies to Venezuela’s oil industry a difficult ask.
Venezuela, in that sense, was ill-prepared to adapt to the post-2014 oil price collapse, compared to its wealthier, Western competitors in other forms of unconventional oil and gas. To be sure, then, the collapse of Venezuela’s oil industry cannot be reduced to geological factors, though there can be little doubt that those factors and their economic ramifications tend to be underplayed in conventional explanations. Above-ground factors were clearly a major problem in terms of chronic inadequacy of investment and the resulting degradation of production infrastructure. A balanced picture thus has to acknowledge both that Venezuela’s vast reserves are far more expensive and difficult to bring to market than standard conventional oil; and that Venezuala’s very specific economic circumstances in the wake of decades of failed IMF-austerity put the country in an extremely weak position to keep its oil show on the road.
Since 2008, oil production has declined by more than 350,000 barrels per day, and more than 800,000 per day since its peak level in 1997. This has driven the collapse of net exports by over 1.1 million barrels per day since 1998. Meanwhile, to sustain refining of heavy oil, Venezuela has increasingly imported light oil to blend with heavy oil as well as for domestic consumption. Currently, only extra-heavy oil production in the Orinoco Oil Belt has been able to increase, while conventional oil production continues to rapidly decline. Despite significant proved conventional reserves, these still require more expensive enhanced recovery techniques and infrastructure investments — which are unavailable. But profit margins from exports of extra-heavy crude are much smaller due to the higher costs of blending, upgrading and transportation, and the heavy discounts in international refining markets. In summary, oil industry expert Professor Francisco Monaldi at the Center for Energy and the Environment at IESA in Venezuela concludes:
“…. oil production in Venezuela is comprised of increasingly heavier oil and thus less profitable, PDVSA’s operated production is falling more rapidly, and the production that generates cash-flow is almost half of the total production. These trends were problematic enough at peak oil prices, but with prices falling they become much more acute.”

The folly of endless growth


Unfortunately, much like his predecessors, Chavez didn’t appreciate the complexities, let alone the biophysical economics, of the oil industry. Rather, he saw it simplistically through the short-term lens of his own ideological socialist experiment.
From 1998 until his death in 2013, Chavez’s application of what he called ‘socialism’ to the oil industry succeeded in reducing poverty from 55 to 34 percent, helped 1.5 million adults become literate, and delivered healthcare to 70 percent of the population with Cuban doctors. All this apparent progress was enabled by oil revenues. But it was an unsustainable pipe-dream.
Instead of investing oil revenues back into production, Chavez spent them away on his social programmes during the heyday of the oil price spikes, with no thought to the industry he was drawing from — and in the mistaken belief that prices would stay high. By the time prices collapsed due to the global shift to difficult oil described earlier — reducing Venezuala’s state revenues (96 percent of which come from oil) — Chavez had no currency reserves to fall back on.
Chavez had thus dramatically compounded the legacy of problems he had been left with. He had mimicked the same mistake made by the West before 2008, pursuing a path of ‘progress’ based on an unsustainable consumption of resources, fuelled by debt, and bound to come crashing down.
So when he ran out of oil money, he did what governments effectively did worldwide after the 2008 financial crash through quantitative easing: he simply printed money.
The immediate impact was to drive up inflation. He simultaneously fixed the exchange rate to dollars, hiked up the minimum wage, while forcing prices of staple goods like bread to stay low. This of course turned businesses selling such staple goods or involved at every chain in their production into unprofitable enterprises, which could no longer afford to pay their own employees due to haemorrhaging income levels. Meanwhile, he slashed subsidies to farmers and other industries, while imposing quotas on them to maintain production. Instead of producing the desired result, many businesses ended up selling their goods on the black market in an attempt to make a profit.
As the economic crisis escalated, and as oil production declined, Chavez pinned his hopes on the potential transformation that could be ushered in by massive state investment in a new type of economy based on nationalised, self or cooperatively managed industries. Those investments, too, had little results. Dr Asa Cusack, an expert on Venezuela at the London School of Economics, points out that “even though the number of cooperatives exploded, in practice they were often as inefficient, corrupt, nepotistic, and exploitative as the private sector that they were supposed to displace.”
Meanwhile, with its currency reserves depleted, the government has had to slash imports by over 65 percent since 2012, while simultaneously reducing social spending to even lower than it was under IMF austerity reforms in the 1990s. Chavistan crisis-driven ‘socialism’ began with unsustainable social spending and has now switched to catastrophic levels of austerity that make neoliberalism look timid.
In this context, the rise of the black market and organised crime, exploited by both the government and the opposition, became a way of life while the economy, food production, health-care and basic infrastructure collapsed with frightening speed and ferocity.

Climate wild cards


Amidst this perfect storm, the wild card of climate impacts pushed Venezuela over the edge, accelerating an already dizzying spiral of crises. In March 2018, on the back of hyperinflation and recession, the government enforced electricity rationing across six western states. In one state, San Cristobal, residents reported 14-hour stretches without power after water levels in reservoirs used for hydroelectric plants were reduced due to drought. A similar crisis had erupted two years earlier when water levels behind the Guri Dam, which provides well over half the country’s electricity, hit record lows.
Venezuela generates around 65 percent of its electricity from hydropower, with a view to leave as much oil available as possible for export. But this has made electricity supplies increasingly vulnerable to droughts induced by climate change impacts.
It is well known that the El-Nino Southern Oscillation, the biggest fluctuation in the earth’s climate system comprising a cycle of warm and cold temperatures sea-surface temperatures in the tropical Pacific Ocean, is increasing in frequency and intensity due to climate change. A new study on the impact of climate change in Venezuela finds that between 1950 and 2004, 12 out of 15 El-Nino events coincided with years in which “mean annual flow” of water in the Caroni River basin, affecting the Guri reservoir and hydroelectric power, was “smaller than the historical mean.”
From 2013 to 2016, an intensified El-Nino cycle meant that there was little rain in Venezuela, culminating in a crippling deficit in 2015. It was the worst drought in almost half a century in the country, severely straining the country’s aging and poorly managed energy grid, resulting in rolling blackouts.
According to Professor Juan Carlos Sanchez, a co-recipient of the 2007 Nobel Peace Prize for his work with Intergovernmental Panel on Climate Change (IPCC), these trends will dramatically deteriorate under a business as usual scenario. Large areas of Venezuelan states which are already water scarce, such as Falcon, Sucre, Lara and Zulia, including the north of the Guajira peninsula, will undergo desertification. Land degradation and decreased rainfall would devastate production of corn, black beans and plantains across much of the country. Sanchez predicts that some regions of the country will receive 25 percent less water than today. And that means even less electricity. By mid-century, climate models indicate an overall 18 percent decrease in rainfall in the Caroni River basin that leads to the Guri Dam.
Unfortunately, no Venezuelan government has ever taken seriously its climate pledges, preferring to escalate as much as possible its oil production, and even intensifying the CO2 intensive practice of gas flaring. Meanwhile, escalating climate change is set to exacerbate Venezuela’s electricity blackouts, infrastructure collapse and agricultural crisis.
Economic war
The crisis convergence unfolding in Venezuela gives us a window into what can happen when a post-oil future is foisted upon you. As domestic energy supplies dwindle, the state’s capacity to function recedes in unprecedented ways, opening the way for state-failure. As the state collapses, new smaller centres of power emerge, competing for control of diminishing resources.
In this context, reports of food-trafficking as a mechanism of ‘economic war’ are real, but they are not exclusive to either political side. All sides have become incentivised to horde products and sell them on the black market as a direct result of the collapsing economy, retrograde government price controls and wildly speculative prices.
Venezuelan state-owned media have pinpointed cases where private companies engaged in hoarding have close ties to the opposition. In response, the government has appropriated vast assets, farmland, bakeries, other businesses — but has failed to lift production.
On the other hand, Katiuska Rodriguez, a journalist investigating shortages at El Nacional, a pro-opposition newspaper, said that there is little clear evidence of hoarding being a result of an ‘economic war’ by capitalist business elites against the government. Although real, she explained, hoarding is driven largely by commercial interests in survival.
And yet, there is mounting evidence that the Maduro government is complicit in not just hoarding, but mass embezzlement of public funds. Sociologist Chris Carlson of the City University of New York Graduate Center points outthat a number of former senior Chavista government officials have come on record to confirm how powerful elites within the government have exploited the crisis to extract huge profits for themselves. “A gang was created that was only interested in getting their hands on the oil revenue,” said Hector Navarro, former Chavista minister and socialist party leader. Similarly, Chavez’s former finance minister, Jorge Giordani, estimated that some $300 billion was embezzled in this way.
And yet, the real economic war is not really going on inside Venezuela. It has been conducted by the US against Venezuela, through a draconian sanctions regime which has exacerbated the arc of collapse. Francisco Rodriguez, Chief Economist at Torino Economics in New York, points out that a major drop in Venezuela’s production numbers occurred precisely “at the time at which the United States decided to impose financial sanctions on Venezuela.”
He argues that: “Advocates of sanctions on Venezuela claim that these target the Maduro regime but do not affect the Venezuelan people. If the sanctions regime can be linked to the deterioration of the country’s export capacity and to its consequent import and growth collapse, then this claim is clearly wrong.” Rodriguez marshals a range of evidence suggesting this might well be the case.
Others with direct expertise have gone further. Former UN special rapporteur to Venezuela, Alfred de Zayas, who finished his term at the UN in March 2018, criticised the US for engaging in “economic warfare” against Venezuela. On his fact-finding mission to the country in late 2017, he confirmed the role of overdependence on oil, poor governance and corruption, but blamed the US, EU and Canadian sanctions for worsening the economic crisis and “killing” Venezuelans.
US goals are fairly transparent. In an interview with FOX News that has been completely ignored by the press, Trump’s National Security Advisor John Bolton explained the focus of US attention: “We’re looking at the oil assets. That’s the single most important income stream to the government of Venezuela. We’re looking at what to do to that.” He continued:
“… we’re in conversation with major American companies now… I think we’re trying to get to the same end result here… It will make a big difference to the United States economically if we could have American oil companies really invest in and produce the oil capabilities in Venezuela.”

The coming oil crisis

It is not entirely surprising that Bolton is particularly eager at this time to extend US energy companies into Venezuela.
North American exploration and production companies have seen their net debt balloon from $50 billion in 2005 to nearly $200 billion by 2015. “[The fracking] industry doesn’t make money…. It’s on much shakier financial footing than most people realize,” said McLean, who has just authored the book, Saudi America: The Truth About Fracking and How It’s Changing the World. Indeed, there is serious gulf between oil industry claims about opportunities for profit, and what is actually happening in those companies:
When you look at oil companies’ presentations, there’s something that doesn’t make sense because they show their investors these beautiful investor decks with gorgeous slides indicating that they will produce an 80% or 60% internal rate of return. And then you go to the corporate level and you see that the company isn’t making money, and you wonder what happened between point A and point B.”
In short, cheap debt-money has permitted the industry to grow — but how long that can continue is an open question. “Part of the point in writing my book was just to make people aware that as we trump at American energy independence, let’s think about some of the foundation of this [industry] and how insecure it actually is, so that we’re also planning for the future in different ways”, adds McLean.
Indeed, US shale oil and gas production is forecast to peak in around a decade — or in as little as four years. It’s not just the US. Europe as a continent is already well into the post-peak phase, and Russian oil ministry officials privately anticipate an imminent peak within the next few years. As China, India and other Asian powers experience further demand growth, everyone will be looking increasingly for a viable energy supply, whether from the Middle East or Latin America. But it won’t come cheap, or easy. And it won’t be healthy for the planet.
Whatever their ultimate causes, the horrifying collapse of Venezuela heralds insights into a possible future for today’s major oil producers — including the United States. The US is enjoying a revival in its oil industry but how long it will last and how sustainable it is are awkward questions that few pundits dare to ask — except a brave few, such as McLean.
This does not necessarily mean oil production will simply slowly grind to a halt. As production limits are reached using current techniques, new techniques might be brought into play to try to mine vast reserves of more difficult resources. However, whatever technological innovations emerge they are unlikely to be able to avert the trajectory of increasing costs of extraction, refining and processing before getting fossil fuels to market. And this means that the surplus energy available to devote to the delivery of public goods familiar to modern industrial consumerist societies will become smaller and smaller.
Meanwhile, the environmental consequences of fossil fuel dependency are making investors re-think the financial viability of these industries, creating a growing risk that they become stranded assets. In this emerging future, the trajectory of endless economic growth as we know it cannot continue. Either way, the warnings signs are unmistakeable. As we shift into a post-carbon era, we will have to adapt new economic thinking, and restructure our ways of life from the ground up.
Right now the Venezuelan people find themselves locked into a vicious cycle of ill-conceived human systems collapsing into violent in-fighting, in the face of the earth system crisis erupting beneath them. It is not yet too late for the rest of the world to learn a lesson. We can either be dragged into a world after oil kicking and screaming, or we can roll up our sleeves and walk there in a manner of our own choosing. It really is up to us. Venezuela should function as a warning sign as to what can happen when we bury our heads in the (oil) sands.

Dr. Nafeez Ahmed is the founding editor of INSURGE intelligence. His latest book is Failing States, Collapsing Systems: BioPhysical Triggers of Political Violence (Springer, 2017). He is a 18-year investigative journalist, formerly of The Guardian where he reported on the geopolitics of social, economic and environmental crises. Nafeez reports on ‘global system change’ for VICE’s Motherboard. He has bylines in The Independent on Sunday, The Independent, The Scotsman, Sydney Morning Herald, The Age, Foreign Policy, The Atlantic, Quartz, New York Observer, The New Statesman, Prospect, Le Monde diplomatique, among other places. He has twice won the Project Censored Award for his investigative reporting; twice been featured in the Evening Standard’s top 1,000 list of most influential Londoners; and won the Naples Prize, Italy’s most prestigious literary award created by the President of the Republic. Nafeez is also a widely-published and cited interdisciplinary academic applying complex systems analysis to ecological and political violence. He is a Research Fellow at the Schumacher Institute.vene



More distortion in the reporting of weather in New Zealand

The media, by exaggerating the heatwave of the past five days and distorting the reality are playing into the hands of idiots who scoff at the idea of a rapidly-warming New Zealand.

I suspect that it is mostly bad reporting by the agencies and extremely lazy and distorted reporting, devoid of context, from the media.
Putting official NZ weather statistic into perspective

Yesterday was a stinking hot day here in Lower Hutt, reaching about 28 degrees celsius.

But It was not the hottest on record.

We were told that today marked the end of the heatwave (which some are saying wasn't a heatwave because it was one day short of the official criteria and because the temperatures didn't reach those of Alice Springs or even Sydney.

This is how Mr. Google represents the temperature.

It says that the temperature at present is 23 degrees.  

My thermometer registered a temperature of 25-26 degrees (and it felt every bit like it, despite the northerly wind)



Worse than that Google is telling me that there was a minimum of 13 degrees (!) when I was sweating under one blanket.

Again my thermometer, measuring the temperature in our kitchen, reflected the situation far more accurately. I told the minimum was 21 degrees.

That's a difference of 8 degrees! We may as well have been talking about different seasons.

But then the headlines are telling us that the heatwave is over and we are in transition to a "cold snap". So we need temperatures to reflect that!

The headlines over the last few days have been pushing the story of record-breaking temperatures.

Take the following:

New Zealand heatwave: Canterbury town reaches its highest temperature ever


1 February, 2019

Hanmer Forest in north Canterbury has hit a record-breaking 38.4degC. 

NIWA posted on Twitter that Hanmer Forest had hit the wildly hot temperature on Thursday - the warmest it's been since records began in 1906.

An end in sight? 'Cold change' coming to end New Zealand heatwave
New Zealand heatwave: Safety warnings as hot weather peaks
NIWA says it's also New Zealand's fourth-equal highest temperature for January on record, and the 18th-equal highest temperature for New Zealand in any month across the year. 



Further north in Marlborough, fire crews are on alert as a worrying change to dry, northwest winds kicks in, increasing the fire risk.

The country has been embracing the warmer weather since it kicked in on Sunday. 

And on Thursday, MetService confirmed to Newshub the hot week was officially a heatwave in some parts of the country.


Masterton, Blenheim, Hanmer Springs, Culverden, Kawerau and Lower Hutt have all had five days in a row with temperatures at least 5degC hotter than the average high for this time of year.

The hot weather is expected to cool on Friday, with Weather Watch warning of a 'Great Cool Down' that will see temperatures in parts of the South Island drop as much as 14degC.

Newshub.

***

The above tells us it was the hottest weather recorded in Hanmer Springs but creates an impression that things were worse than they were.

For context take the following articles from 2018.

We are a long way from an all-time record of 42.4 degrees Celsius set in Rangiora in 1973.


According to Niwa, the top 10, all above 39 degrees Celsius, were mainly recorded in Canterbury. The highest was 42.4C in Rangiora. 

The only top temp that wasn't recorded in Canterbury was the second-highest – 42.3C in Jordan, Marlborough.

There were a few ties that meant some of those temperatures from February 7, 1973 were matched in other years.

At fourth-hottest, Timaru on February 6, 2011 tied with Ashburton on February 7, 1973 at 41.3C. 

At eighth, Timaru Botanic Gardens on February 22, 1908 matched Christchurch Airport on February 7, 1973 at 40C.

In ninth place, Timaru airport and Ashley Forest were equal on February 7, 1973 at 39.8C.


***

The following is from last year when Hanmer was just one degree short of yesterday's record.

Temperatures could hit 40 degrees


26 January, 2018


Scorching temperatures on Thursday are expected to be beaten early next week, with Niwa saying 40 degrees Celsius is possible on Tuesday.

Thursday was particularly warm across Canterbury, with Niwa Weather reporting the town of Waiau got to 37C, the warmest temperature recorded in New Zealand in seven years. Hanmer Forest reached 36.2C.

Interior parts of Otago and Canterbury were expected to be particularly affected next week, with warm air coming from Australia pushing temperatures up.

Niwa principal forecasting scientist Chris Brandolino said 40C was "a distinct possibility".


***

They are always predicting temperatures. I wonder what the actual temperature was.

Obviously  it didn't reach 40 degrees.

The alarming thing is not so much that we have had high temperatures over a 5 day period but that the temperatures have been consistently high over many weeks.

Since well before Christmas the measured temperatures have only gone down as low as 18 degrees on a couple of occasions but have never been lower than 20 and until the last few days, never higher than 25 degrees.

To put it into perspective, weather statistics (to the extent they can be trusted) tell us that the  average high temperature for Lower Hutt in January-February is 20 degrees.

But no one is going to tell you about it!

Over the past few days the recorded temperatures have been remarkably close to what I have been measuring until today, when they have gone back into the category of fiction - just like in winter.