Passport

Glencore: The global food crisis is good for business

Commodities trading giant Glencore is under attack from aid groups after describing rising global food prices as a business opportunity:

Glencore's director of agriculture trading, Chris Mahoney, sparked the controversy when he said: "The environment is a good one. High prices, lots of volatility, a lot of dislocation, tightness, a lot of arbitrage opportunities.

"We will be able to provide the world with solutions... and that should also be good for Glencore."

The head of the Food and Agriculture Organization told the Independent,  "Private companies like Glencore are playing a game that will make them enormous profits."

Glencore went public last year with a valuation of more than $60 billion -- higher than Boeing or Ford. Ken Silverstein profiled the company and its frequent ties to repressive and corrupt regimes for FP's May/June issue: 

Another way Glencore makes so much money is by leveraging information to take advantage of the wild swings that have marked global commodity prices in recent years, with oil yo-yoing from $147 a barrel in mid-2008 down to $40 later that year and more recently back up over $100. Poor countries that sell commodities often end up losers when prices go down -- like Zambia, which in recent years has been intermittently walloped by a combination of rising prices for agricultural products and sharply falling prices for copper and the other mineral exports on which it depends. But Glencore, like a casino where the house always wins, "benefits directly from the volatility," as Deutsche Bank noted cheerfully in a report on the IPO for potential investors.

On the site today, Robert Hormats looks at how another global food crisis could still be prevented. 

Passport

The country with the world's largest oil reserves is importing gas

A pretty damning indicator about Hugo Chavez's Venezuela:

Experts said that Venezuela has shifted from exporter to importer of gasoline under the Hugo Chávez administration, which is forced to import fuel and components to process it from the United States, not only for internal consumption but to allow the state enterprise Petróleos de Venezuela, S.A. (PDVSA) to fulfill contractual commitments.[...]

According to the Department of Energy, Venezuela imported 1 million barrels of processed gasoline only in December 2011, which, added to the its purchases from the United States of crude oil and oil derivatives reached a total of 2.21 million of barrels.

Experts said that the refinery capacity in Venezuela has been dismantled in the last 10 years, first by a Chávez administration decision to sell the PDVSA refineries abroad, and later due to a chain of accidents and maintenance problems in the country’s main refineries.


Read more here: http://www.mcclatchydc.com/2012/08/24/163389/venezuela-is-importing-oil-despite.html#storylink=cpy

Some parts of Venezuela have begun rationing fuel. This is a country with the world's largest crude oil reserves -- some 290 billion barrels -- that has touted its program to provide free home heating oil to low-income Americans. 

F
Read more here: http://www.mcclatchydc.com/2012/08/24/163389/venezuela-is-importing-oil-despite.html#storylink=cpy

Getty Images