STEVE INSKEEP, host:
Members of OPEC decided yesterday not to make any changes to their production quotas; that's despite near record oil prices. The meeting of the Organization of Petroleum Exporting Countries was hosted by Venezuela. That country had been demanding a production cut - a reduction in the supply of oil - and President Hugo Chavez announced at the start of this meeting that oil prices, as far as he was concerned, could go as high as infinity. NPR's Lourdes Garcia-Navarro reports from the Venezuelan capital, Caracas.
LOURDES GARCIA-NAVARRO reporting:
OPEC has been trying to distance itself for a while from the politics of oil. But ministers attending this OPEC conference had a host with other ideas.
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GARCIA-NAVARRO: President Hugo Chavez took to the stage yesterday to inaugurate the meeting, and talked at length about everything from his friendship with convicted terrorist, Carlos the Jackal, to his view that President Bush is a threat to the world. And, of course, he laid out his ideas on what the price of oil should be.
President HUGO CHAVEZ (President, Venezuela): (Foreign language spoken)
GARCIA-NAVARRO: He says, today the market has enough oil. We do not need to increase output. He went on to say that the bottom price should be $50, and the ceiling, infinity. He says we don't need to put a ceiling on it.
Venezuela has been pushing for a cut in output to drive prices even higher. Chavez says that oil-rich countries should no longer have to slake, what he says is the wasteful thirst of countries like America, by supplying cheap oil. Chavez has been implementing his message at home by increasing taxes on foreign oil firms and rewriting contracts to give majority ownership to the state oil company here.
President CHAVEZ: (Foreign language spoken)
GARCIA-NAVARRO: He says, now the petroleum belongs to the Venezuelan people. The oil is being used for justice, for equality, for the development of our country; that's the truth, he says. He's also been pushing his agenda regionally. Bolivia has nationalized its natural gas fields and Ecuador has just seized fields from a U.S.-based company. In a deal struck this week, Venezuela will be refining the oil from Ecuador.
While this has raised alarm bells for international investors, oil analyst Roger Tissot from PFC Energy says that it's natural for countries to want a bigger slice of growing profits.
Mr. ROGER TISSOT (Director, Markets and Countries Group, PFC Energy): They know that this is an opportunity in which they can obtain a windfall revenue, so it is not surprising they're trying to do that to maximize the revenue when prices are high.
GARCIA-NAVARRO: There is another reason why Chavez wants prices high. Venezuela has vast, untapped reserves of extra-heavy crude in the Orinoco region. It needs high prices to make extraction of the tar-like oil cost effective. If the fields are certified by OPEC, Chavez claims Venezuela would have reserves that would rival Saudi Arabia's.
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GARCIA-NAVARRO: In a large hall, ministers from the OPEC nations answered questions from the press. None, except Venezuelan ally, Iran, wanted to comment on Chavez's speech, which predicted the eventual destruction of what he called the American empire. But statements like this one from United Arab Emirates oil minister, Mohamed bin Dha'en Al Hamili, showed that most OPEC nations are worried about high oil prices and its potential effect on the U.S. economy.
Mr. MOHAMED BIN DHA'EN AL HAMILI (Energy Minister, United Arab Emirates): It's very important for us to actually see that the American economy is maintaining its growth, because it's so significant to the world economy. And if something happened to the American economy, I think all of the rest will follow.
GARCIA-NAVARRO: Most ministers agreed, though, that with concerns over turmoil in Nigeria, Iraq and Iran, oil prices are not expected to drop any time soon.
Lourdes Garcia-Navarro, NPR News, Caracas, Venezuela. Transcript provided by NPR, Copyright NPR.
