Hunting Hugo

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In late June, U.S. Southern Command, the arm of the U.S. military in Latin America, concluded that efforts by Venezuela, Ecuador, and Bolivia to extend state control over their oil and gas reserves posed a threat to U.S. oil supplies. While Latin America produces only 8.4 percent of the world's oil output, it supplies 30 percent of the oil consumed in the United States.

“A re-emergence of state control of the energy sector will likely increase inefficiencies and, beyond an increase in short-term profits, will hamper efforts to increase long-term supplies and production,” the study concludes. In an interview with the Financial Times , Col. Joe Nunez, a professor of strategy at the U.S. Army War College, added an observation that ought to send a collective chill down the backs of the three countries named: “It is incumbent upon the Command to contemplate beyond strictly military matters.”

That one of the U.S. military's most powerful arms should find itself deep in the energy business should hardly come as a surprise. Four months after Bush took office, Vice President Dick Cheney's National Energy Policy Development Group recommended that the administration “make energy security policy a priority of our trade and foreign policy.” The administration has faithfully followed that blueprint, using war and muscular diplomacy to corner U.S. energy supplies in the Middle East and Central Asia.

What most Americans don't know is that Venezuela's reserves are enormous. According to a department of energy estimate, they are considerably greater than Saudi Arabia's, and may be as high as 1.3 trillion barrels. Most Venezuelan oil is heavy and expensive to refine, but as long as oil stays above $50 a barrel—and few doubt it will go lower—it is an almost endless gold mine.

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