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Americans should be watching too. Venezuela, which sits atop 78 billion bbl. of oil--and as much as 270 billion bbl. of extra-heavy crude--is the world's fifth largest oil exporter. It's also a founding member of the OPEC oil cartel (the 11-nation Organization of Petroleum Exporting Countries). In past decades, to please consumers in the U.S.--PDVSA's biggest market, which buys two-thirds of its exports--Venezuela often ignored OPEC's guidelines, stepping up production even when oil prices hit rock bottom in the late 1990s. But Chavez, a harsh critic of the U.S. who accuses the Bush Administration of backing a failed coup against him in 2002--a charge the White House denies--has led a successful campaign to revive a demoralized OPEC, curtailing Venezuelan production to gain what Rodriguez calls "fairer prices."
Chavez--who faces a national recall referendum on Aug. 15--warned the U.S. this year that he'll turn off the oil spigot if the Bush Administration threatens to invade Venezuela over either politics or oil. U.S. officials dismiss that notion as absurd, but Rodriguez echoes the concern: "Many people here fear what happened in Iraq could happen to Venezuela." Still, Rodriguez, an attorney and a classical-music lover, emphasizes that Venezuela "doesn't want price volatility" and wants to continue being the U.S.'s most reliable supplier. "There is no contradiction between a strong alliance with OPEC," he says, "and a strong relationship with our principal client."
Though PDVSA supplies almost half the government's revenues, it once ran itself like a private corporation--acquiring subsidiaries like U.S.-based CITGO--and gained a global reputation as a model oil firm. But at home it was viewed as a den of arrogant, pampered technocrats--and a cookie jar for Venezuela's elite, whose corruption has left two-thirds of the population in poverty. Among the poor was Rodriguez's farming family. It made him all the more receptive to economists like Bernard Mommer, a German-born Marxist who taught Rodriguez at Caracas' Central University. As a Congressman, Rodriguez chafed in the 1990s as PDVSA opened up to what he considered excessive foreign investment and hiked production.
As Energy Minister, Rodriguez quickly made PDVSA more subservient to both the government and OPEC, which elected him secretary-general in 2001. PDVSA has also supplied Chavez ally Fidel Castro more than 54,000 bbl. a day on favorable finance terms. The politicized atmosphere at PDVSA--many workers say devotion to the Chavez revolution is a job requirement--helped provoke the 2002 strike. Says Ignacio Layrisse, who was afterward fired as production manager: "Ali Rodriguez may be a smart and capable man, but he's just a has-been lefty carrying out Chavez's plans to turn PDVSA into a mediocre state-run company."