Daniel B. Markind, Esq.
Weir and Partners, LLP
The pipeline industry has received a hard lesson about how not to play into the hands of its most vicious enemies who saw opportunity and grasped it.
Venezuelan President Nicolas Maduro, a modern day Dante, seems intent on inflicting on his people ever deeper stages of hell. The next will be a likely sovereign debt default. Since the sham plebiscite chose a new Constitutional Assembly, Venezuela’s currency has tanked, increasing the pain felt by ordinary citizens. A sovereign default will make it much more difficult for Venezuela to sell its oil, the one asset it has left.
As I’ve written numerous times, it all comes down to the junior officer corps of the Venezuelan military. They are the ones who haven’t stashed huge amounts of cash abroad yet must order their troops to fire on starving Venezuelans. Will they continue to do so? Will they agree to change from firing mostly tear gas at the citizens to live ammunition? If so why?
Under these circumstances, the shale revolution gives us the benefit of time. Oil prices are not gyrating wildly. Thanks to shale, we have the option of sitting back, doing nothing, letting Maduro self-destruct, and quietly working with the junior officers. It may not work, but it’s a much better position to be in than one in which our entire economy, and that of the world, were facing a crisis similar to the 1973 or 1979 oil shocks.
Back in Pennsylvania, last week saw a significant development whose repercussions may be felt for years. For the gas industry, it is entirely a self-inflicted wound.