The fallacy of "dependence"

The Guardian today adds to the seemingly limitless supply of publicity being given to Venezuela’s Hugo Chavez with a piece by Simon Tisdall headlined "Chavez the Bush baiter". Tisdall opens up by exclaiming that:

Hugo Chávez knows how to wind up the US government. His latest wheeze - selling discounted home heating oil to chilly residents of Massachusetts - follows his offer to help victims of Bush administration bungling over Hurricane Katrina.

I guess it is now established fact, at least in The Guardian newsroom, not only that Bush “bungled” over Katrina, but that it was this “bungling”, and not Katrina herself, that created “victims” requiring help. That aside, I must wonder exactly how these things have “wound up” the US government. I don’t doubt that both his involvement in the Massachusetts oil deal and his offers of “help” over Katrina were intended by Chavez to do so. But from what I have seen, far from getting wound up over them, the US government has mostly just simply ignored them.

But what I particularly wanted to note was something else that Tisdall wrote. Noting the possibility of a new Columbian oil pipeline stretching to its Pacific coast, he says:

That could increase Caracas's oil exports to China at the expense of the US, which depends on Venezuela for roughly 15% of its foreign oil.

The extent to which the US is “dependent” or “reliant” on Venezuela for oil imports is a fairly typical formulation in media coverage of Chavez, the US, and oil. It frames the issue such that the US appears to be a hostage to Chavez. Hence, if Caracas increases oil exports to China, it will come "at the expense of the US". But is that really the case?

First of all, the US imports about 61% of its oil, which means that when Tisdall says “roughly 15% of its foreign oil”, what he really means is “roughly 9% of its oil consumption.” So already it is clear that the US is not quite so “dependent” as the inflated figure suggests. But is it really the case that the US is “dependent” on specifically Venezuelan oil to any extent at all? The answer to anyone with much economic sense: Of course not.

Imagine you live in a town with 5 grocery stores, and you like to spread your business around, so, after growing 40% of your own food in your back garden, you go to each of the 5 stores and buy 20% of your remaining needed food from each. Does that make you “dependent” on any given store for 12% (20% of 60%) of your food? No. If one store refused to sell to you, you could simply reallocate where you purchase from, and buy 15% from each of the remaining 4 stores.

The oil market is a global market. If, for whatever reason, Venezuela decided not to sell to the US, the US would simply go elsewhere to buy what was needed. True, it may have to pay a higher price, but then so would everyone else, because global demand for non-Venezuelan oil would have increased. In other words, if Venezuela decided not to sell oil to the US, all oil consumers would suffer, not just the US, because the global supply would have dropped and global demand would have risen, leading to higher global prices. In fact, everyone, not just the US, is “dependent” upon Venezuelan oil, even if it happens to be primarily the US which buys from Venezuela.

But suppose, for the moment, that Tisdall is correct, and the US does indeed “depend” on Venezuela for 9% of its oil consumption. Let's look at the situation from a slightly different point of view. The US currently imports about 13.2 million barrels of oil per day, which, given Tisdall’s 15% dependency, means that the US is importing roughly 1.98 million barrels per day from Venezuela. Venezuela’s entire oil exports are just 2.36 million barrels per day. So, it turns out that the US accounts for 83.9% of all export revenues that Venezuela receives from its oil production.

Now, according to the CIA World Fact Book’s entry on Venezuela:

Venezuela continues to be highly dependent on the petroleum sector, accounting for roughly one-third of GDP, around 80% of export earnings, and over half of government operating revenues.

So, one could say, if one was so inclined (which, of course, The Guardian is not) that Venezuela is dependent on US oil consumption for roughly 28% of its GDP, 67% of its total export earnings, and at least 43% of government operating revenues. Or, in other words, without US oil consumption, Venezuela would be an extremely poor country.

Hmmmm. 9% of US oil consumption, versus 28% of Venezuela''s entire GDP. Exactly which country is “dependent” upon the other?

Thanks, UK

In the UK, as in most of the rest of the world, today is Thursday. In the US, however, today is Thanksgiving, the most quintessentially American holiday on the calender. It is the one day of the year, more than any other, on which I am wistful about not being there.

With that in mind, and in the spirit of the day, I present a short, eclectic list of things for which American expats in the UK should be, and this one in particular is, thankful:

• NASN
• The internet (Imagine having to rely on just the BBC, the British press, and the International Herald Tribune for daily information about the States.)
• Costco
• Frequent flyer miles
• Sky digital (Sky sports, The History Channel, FOX News...what would I do without it?)
• Boxing Day
• Adam Smith
• The tradition of classical British liberalism (for which all Americans should be thankful)

Most of all, thanks to all our British friends who have helped to make us feel at home in a foreign land. Have a good Thanksgiving.

BBC moonlights as Hugo Chavez' PR firm

Today the BBC carried a story under the headline "Venezuela gives US cheap oil deal". The lead on the story reads as follows:

Officials from Venezuela and Massachusetts have signed a deal to provide cheap heating oil to low-income homes in the US state.

Contrary to the headline, the "US" has been given nothing at all, and despite the implication of the lead, government officials didn't sign anything. Actually, the deal was signed by officials from Citizens Energy, a private, non-profit corporation based in Massachusetts, and officials from CITGO, a US-based company that is owned by PVD America, itself a subsidiary of the state-owned Petróleos de Venezuela SA.

It is true that the deal was initiated by contacts betwen a Massachusetts politician, William Delahunt, and Venezuelan president Hugo Chavez. But the spokesman for Delahunt said that Delahunt "did not get involved in the details of the contract", and he characterized the deal as one between "'a US company and two nonprofits."

BTW, according to the Boston Globe the $9 million deal represents a discount of about 40%, which is an effective "donation" to the non-profits of about $6 million. In contrast, for the year 2004, Exxon Mobile (to take just one example) made charitable donations of $106.5 million in cash, goods, and services, including $35.8 million in countries other than the United States. No word yet on whether the BBC plans on covering these donations.

Unbeknownst to BBC readers...

Guess who agrees with Dick Cheney and disagrees with her newly famous fellow Democrat, John Murtha?

Sen. Hillary Rodham Clinton said Monday that an immediate U.S. withdrawal from Iraq would be "a big mistake."

The New York Democrat said she respects Rep. Jack Murtha, D-Pa., the Vietnam veteran and hawkish ex-Marine who last week called for an immediate troop pullout. But she added: "I think that would cause more problems for us in America."

Don't bother looking to the BBC's website for this information. It, apparently, is only interested in unknown Dems who disingenuously call for "immediate" troop withdrawals from Iraq. High profile Dems who agree with the White House are not, it seems, news that he BBC wants you to know about.

A letter to The Guardian

A letter sent to The Guardian's Julian Borger and the "reader's editor":

Mr. Borger,

In your piece today on VP Cheney’s speech at the American Enterprise Institute, you made a couple of strange assertions. I was hoping if you might clarify them for me.

You said that Cheney’s remarks represented a "change in tactics" which "reflected an acknowledgment that the White House had stumbled in its attempt to slow momentum towards a quick withdrawal by targeting its advocates rather than their arguments." But at no point did you establish, or even attempt to establish, that a strategy of targeting people personally rather than their arguments had been adopted by the White House. I am a fairly keen watcher of the US political scene, and I am unaware of any reason to think that such a strategy had ever been employed, and therefore no reason to think that Cheney’s comments represented a "change in tactics". What evidence is there that the White House had been targeting the advocates of an immediate pullout personally rather than taking on their arguments (such as they are)?

You also said that "The vice-president tried to make a distinction between its critics. He called a truce in the war of words with those who wanted a quick withdrawal, but escalated the attack on those who accuse senior officials of deliberately exaggerating the threat posed by Saddam Hussein."

Why "tried"? Isn’t it a fact that he did make a distinction? The implication of your wording is that he drew a distinction where none exists. Is it the position of The Guardian that there is no relevant distinction to be drawn between those who criticize the president’s war policy and those who accuse him of lying?

Lastly, why do you characterize Cheney’s statements as an "attack"? Isn’t he in fact defending the administration from the initial attacks by Democrats who claim the administration lied the country into war?

Any answers you might have would be much appreciated.

Regards,
Scott Callahan
The American Expatriate

Is there an agenda?

A timeline worth noting:

Nov 17 – Democratic Congressman John Murtha calls for a “immediate redeployment of American forces” from Iraq. The BBC makes Murtha’s call the top story on the America’s page of its website.

Nov 18 – House Republicans put resolution 571 to the floor:

Resolved, it is the sense of the House of Representatives that the deployment of United States forces in Iraq be terminated immediately.

Following a rancorous debate, the House overwhelmingly defeats the resolution, 403-3. Notably, Congressman Murtha is not one of the three supporters the resolution, despite his call the previous day for precisely the same thing. Instead, Murtha puts forward his own resolution, calling for the withdrawal of troops “at the earliest practicable date.” “Practicable” remains undefined. The BBC apparently finds nothing notable to report about the resolutions, the debate, the vote, or the fact that Murtha has seemingly backed away from his much hyped call for an immediate withdrawal, as its website has no articles on this at all.

Nov 20 – Donald Rumsfeld, appearing on Sunday talks shows, dismisses calls for an immediate withdrawal of troops from Iraq. The BBC notes Rumsfeld’s statements, and provides background to the issue by mentioning Murtha. It points out that “In Friday’s Congress debate, Mr. Murtha called for troops to leave Iraq within six months, prompting some Republicans to accuse him of abandonment, surrender and even cowardice.” The BBC does not mention a) the resolution that was the subject of the debate; b) that Murtha himself had actually called for “immediate” withdrawal from Iraq prior to the debate; or c) that it was in fact those unmentioned calls for an immediate withdrawal, not a call for a 6 month timetable, which led to Republican vitriol. The BBC does add that Murtha says “he had received great support for his position.” Although this might have seemed like an obvious time to point out it out, the BBC yet again fails to inform its readers that the House actually voted 403-3 against his position.

Nov 20 – President Bush gives a brief news conference in Beijing, following which he finds his self-described "escape" thwarted by locked doors. In contrast to the apparently less important goings on in the House, the BBC makes this the centerpiece of two separate pieces on its website, and adds a video for good measure.

Your "license fee" at work.