Venezuelan Gov't: Oil Strike Costs $4B

www.austin360.com By STEPHEN IXER Associated Press Writer

CARACAS, Venezuela (AP)--A strike that has almost paralyzed Venezuela's crucial oil industry is an act of ``terrorism'' that has cost the country $4 billion, the energy and mines minister said.

Strikers have tried to cause chaos and violence in our urban areas by impeding the supply of gasoline, diesel and domestic gas,'' Rafael Ramirez said in a televised address Monday. All these acts of terrorism have brought tremendous consequences for the nation.''

Once the world's fifth-largest oil exporter, Venezuela has had to pay $105 million to import more than 2 million barrels of gasoline since a general strike began Dec 2, Ramirez said. It's the first time Venezuela has imported gasoline in almost a century, he noted.

Venezuela's opposition parties and the largest labor union and business chamber called the general strike to pressure Chavez into calling early elections. The walkout is strongest in state oil monopoly Petroleos de Venezuela S.A., where 30,000 of 40,000 workers are off the job.

Oil provides half of government revenue and 80 percent of export earnings.

Venezuela's strike has contributed to an increase in U.S. gasoline prices by 5 cents per gallon in the past three weeks to an average $1.50 a gallon, according to the Lundberg Survey of 8,000 U.S. service stations.

Citing scarce gasoline imports from Venezuela, the U.S. Energy Department said American motorists could pay up to $1.54 per gallon of gasoline this spring even if war is averted in Iraq.

The market underestimated the tenacity of the Venezuelan strikers,'' said Phil Flynn, head of the energy trading desk at Alaron Trading Corp. on the Chicago Mercantile Exchange. People are finally starting to wake up not just to the strike but also to Venezuela's importance as a U.S. supplier.''

Chavez has fought back by firing at least 1,000 white-collar workers at PDVSA.

Ramirez said daily oil production now surpasses 800,000 barrels. Striking oil executives fired by Chavez say output is just over 400,000 barrels a day. Before the strike, production was up to 3 million barrels a day.

Some strike leaders were considering asking small businesses _ who say they cannot sustain losses much longer--to resume work, together with medical workers and teachers, hoping to avoid a popular backlash.

But the strike will continue in the oil industry, said Enrique Naime, a leader of the opposition Democratic Coordinator movement.

Most private schools and some public schools have been closed since the strike started. Hospital workers supporting the strike are only attending emergencies. Many supermarkets have run out of milk and are running low on staples such as flour and drinking water. Many medicines no longer are available at pharmacies.

``At this moment, the doctors' strike could be counterproductive, just like the educational strike could be counterproductive,'' Naime said.

William Davila, another Democratic Coordinator leader, said the food industry also should be given the freedom to ensure basic supplies.

But Davila said any easing of the strike should depend on a forthcoming Supreme Court ruling on the legality of a nonbinding referendum on Chavez's rule. The National Elections Council scheduled the vote for Feb. 2 after accepting an opposition petition signed by 2 million people.

Chavez says the nonbinding vote would be unconstitutional. His presidency runs until January 2007, and Venezuela's constitution says a binding referendum may be held halfway into his six-year term, or August.

During Monday's round of negotiations, which are sponsored by the Organization of American States, the two sides discussed the possibility of amending the constitution to allow early presidential elections, said OAS Secretary-General Cesar Gaviria.