SENATOR HUTCHISON WARNS THAT CHAVEZ'S OIL NATIONALIZATION WILL HAVE DANGEROUS CONSEQUENCES

Mr. President, I wish to talk about what I see happening in Venezuela and what I think America should be doing to make sure we maintain the capability to control our national security and our economic security.

Today, President Hugo Chavez is completing his latest and most ominous scheme out of the Fidel Castro playbook. He is nationalizing multibillion-dollar, heavy oilfields in the Orinoco Belt. This energy-rich region southeast of Caracas has so much energy potential that some experts claim it could give the country more oil reserves than Saudi Arabia.

By seizing the Orinoco Belt, President Chavez is consolidating his political power within Venezuela and increasing his ability to manipulate global oil markets.

This nation now accounts for 14 percent of America's oil imports, and Mr. Chavez has promised to use his ``strong oil card'' to, in his words, ``finish off the U.S. empire,'' even if that means colluding with some of the most nefarious regimes on Earth.

Similar to Fidel Castro, who partnered with the Soviet Union during the Cold War, President Chavez is making common cause with America's enemies, including the world's largest state sponsor of terrorism, the Government of Iran.

Earlier this year, he met with Iranian President Mahmoud Ahmadinejad and made plans for a $2 billion joint fund, part of which will be used as a ``mechanism for liberation'' against American allies.

President Chavez hopes that the profits from the Orinoco Belt will flood his coffers for other foreign adventures. But by asserting government control over this coveted region, he is actually killing the golden goose that feeds his socialist-inspired revolution.

President Chavez's national oil company has already shown signs of stress. Despite record oil prices that should be a boon for the industry, the state-run company has been forced to accumulate a rapid increase in debt to pay for a doubling of ``social development spending.'' Meanwhile, its spending on energy exploration and production badly trails its global peers.

In addition, the Orinoco Belt pronouncement has made ExxonMobil, Conoco Phillips, and other energy companies extremely cautious about putting their employees and billions of dollars in assets under Venezuelan management, and for good reason.

If those American corporations decide to withhold their expertise and investment, it could further weaken the Chavez Government's pursuit of socialist dreams and redistribution of wealth. ``It seems as if they are going to strangle themselves with their own rope,'' said a foreign oil analyst who chose not to be identified for fear of retaliation.

President Chavez's gross mismanagement of the economy should be no surprise to anyone who has followed the career of his Cuban mentor, Fidel Castro. In less than half a century, Fidel Castro has turned what was once the third richest nation in Latin America into one of the poorest nations in the world, a real-life prison for 11 million people who rely on remittances from abroad to avoid starvation and collapse.

If President Chavez continues to adopt the Castro economic model, the greatest victims will be the Venezuelan people, but America will also suffer. That is because the deterioration of Venezuela's oil industry could spark a surge in oil prices for American consumers, and we all know that prices have already jumped in the last 30 days. Anyone who has filled a gasoline tank knows this would be a huge hit on the American economy. In fact, some economists say every time oil prices rise by 10 percent, an average of 150,000 Americans lose their jobs because it presses the economy. Margins are narrowed, and that means people are laid off.

So what should our response be? America must recharge its efforts to adopt a comprehensive plan for American energy independence, including more exploration for oil and gas at home. It should be a comprehensive plan that includes conservation, renewable energy, new research for new forms of energy that we have not yet explored, and it should include more exploration and drilling for our own resources which we can be assured of controlling.

I wrote an editorial in one of the December issues of the Houston Chronicle that said we should be looking to the Outer Continental Shelf of the United States, the Gulf of Mexico, Alaska and even the Virginia shores and other shores on the Pacific and Atlantic sides.

Using the comprehensive energy legislation we passed last year, I was very pleased to see the announcement yesterday by the Department of the Interior that we would, in fact, increase production of the natural resources in this country. The Secretary, Dirk Kempthorne, who was once a Member of this body, announced that there would be 21 lease sales in eight planning areas which could produce 10 billion barrels of oil and 45 trillion cubic feet of natural gas over 40 years. That would generate about $170 billion in today's dollars.

The potential for this amount of oil exploration alone is equivalent to 20 years' worth of what we import from Saudi Arabia or Venezuela.

They are doing exactly what Congress has authorized them to do--looking in the Outer Continental Shelf. Even the Commonwealth of Virginia is positive about this move because there are now incentives for States to allow production in the waters they control. This is one part of what we must do as part of a comprehensive approach to energy independence.

We also need to increase research into alternative fuels, such as solar and wind power. In March, I introduced legislation called the CREST Act, which provides a comprehensive, coordinated national research effort that would spur the development of renewable energy for the marketplace. The oceans and the Gulf of Mexico have potential for energy production and electricity production. Just as we have seen wind energy become a factor on land, it can also be a factor in our bodies of water.

We have the resources to achieve energy independence--the resources underneath our land and water--and the best resource of all, the ingenuity of our free, creative minds. Now we need the willpower to use it.

President Chavez's announcement today is a tremendous challenge to America's energy future, but if we choose to be proactive, as we've always been throughout our history, we can regain control of our energy resources, and be the strongest Nation on Earth.

We can write our own history, and today is the wake-up call that assures we must do it.

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