May 05, 2007 ... It’s not their oil, it’s our oil.

As of May 01, 2007, President Hugo Chavez has offered foreign oil companies such as BP PLC, Conoco Phillips, Exxon Mobil Corp, Chevron Corp, Total SA and Statoil ASA currently operating out of Venezuela’s Orinoco basin, the opportunity to fairly negotiate a 40% minority share in their own investments in the face of expropriation at gunpoint. In addition, President Hugo Chavez is whipping up domestic and international socialist-gangster support by denouncing the American administration as war criminals. War criminals without whom, ironically enough, Venezuelan heavy crude would not be worth pumping at less than $40.00 a barrel. And which, without the American refineries and foreign capital to extract and refine, would be still deep in the ground of the Orinoco basin.

El Presidente Hugo Chavez hands over your property to a grateful Venezuelan nation as part of May Day celebrations. 'This is the true nationalisation of our natural resources': Hugo Chavez.

Like the vast majority of oil-rich nations, this wealth, as it is euphemistically known, was considered a nuisance wherever it appeared by natural happenstance before the time of the Internal combustion engine, and the development of the plastics industries, for example. In short, without man’s intellect to create the goods and services which also create the incentive to transform natural resources into wealth, there is no wealth. Nor is there any wealth whenever there is no recognition of private property rights. On both these counts, President Hugo Chavez, like his predecessors and foreign counterparts, will quickly fail.

Until such times as private property rights are properly protected, and there is an understanding as to what constitutes wealth, South American countries and their citizens will always be impoverished in comparison to others, such as Chile and Panama.

As for a proper response to this issue there is a military one for both strategic and property rights reasons. But until we get out of Iraq and can avail ourselves of the troops with battle-proven training in urban warfare, this is not particularly feasible. Venezuela is in the process of acquiring fifty Russian MIG 29 Fulcrums to replace their aging F-16 fleet, but they would be no problem after the first day of conflict, at most, after which there is an armed and propagandized Venezuelan citizenry to contend with.

In the meantime, the best solution would be for institutional investors to withdraw their funds from oil companies with South American interests and invest in substitute technologies. This will also send a clear message to other oil-rich nations.