Record oil prices spark Venezuela
Venezuela is preparing a “windfall” oil tax to boost the OPEC nation’s revenues from record crude prices, only months after leftist President Hugo Chavez’s nationalization crusade forced out two of the world’s largest energy companies.
The move extends Chavez’s broad campaign to boost state control over oil operations that led to legal battles with Exxon Mobil (XOM.N: Quote, Profile, Research) and ConocoPhillips (COP.N: Quote, Profile, Research) and helped spark a wave of resource nationalism throughout the Andes.
“Because of high oil prices, oil companies have excessive earnings that go beyond reasonable levels of profitability,” Legislator Angel Rodriguez told state news agency ABN.
“One way to distribute them to our people, who are the owners of the oil, is to create this tax.”
The windfall tax will take 50 percent of oil revenues above $70 per barrel, Rodriguez said, and an additional 60 percent of revenues over $100 per barrel cash advance.
Rodriguez said Congress, completely controlled by Chavez’s allies, would give initial approval to the measure this week.
The move will give Chavez new funds to shore up popularity among the nation’s poor majority that has backed him for almost a decade but is increasingly criticizing his government for nagging food shortages and rampant crime.
Supporters of the firebrand leader generally support his bare-knuckles negotiating style with foreign oil companies, which has spread to Andean allies Bolivia and Ecuador.