White House Chronicle

News Analysis With a Sense of Humor

Memories of PDVSA: The Same Problems, Just Worse Now

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In 1991, the state oil company of Venezuela, Petroleos de Venezuela, S.A., known as PDVSA, invited the international energy press to visit.

I was one of the reporters who flew to Caracas and later to Lake Maracaibo, the center of oil production, and then to a very fancy party on a sandbar in the Caribbean.

They were, as a British journalist said, “putting on the dog.”

At that time, PDVSA executives were proud of the way they had maintained the standards and practices which had been in force before nationalization in 1976. The oil company was, we were assured, a lean, mean machine, producing about 3.5 million barrels per day.

They were keen to claim they had maintained the same esprit under state ownership as they had had when they were privately owned by American companies.

They had kept political interference at arm’s length, executives claimed.

PDVSA’s interest then, as it has always been, was more investment, particularly in its natural gas, known as the Cristobal Colon project.

In President Donald Trump’s takeover of Venezuela’s moribund oil sector, natural gas hasn’t been much mentioned — although there may eventually be more demand for natural gas from Venezuela than for its oil.

We had a meeting with Venezuela’s president, Carlos Andres Perez, who was called CAP. He painted a rosy future for the country and its oil and gas industry.

CAP believed the oil revenues would modernize the country. Particularly, he said that technology was needed to make the heavy oil more accessible and manageable.

And there’s the rub. While everyone is quick to point out that Venezuela’s oil reserves are the largest in the world, all oil isn’t equal.

Venezuela’s oil is difficult to deal with. It doesn’t just bubble out of the ground. Instead, 80% of it is highly viscous, more like tar than a free-flowing liquid. And it has a high sulfur content.

In other words, it is the oil that most oil companies, unless they have special production and refining facilities, want to avoid. It takes special coaxing to extract the oil from the ground and ship it.

Venezuelan oil has a high “lifting cost” which makes it expensive to begin with. At present, that cost is about $23 per barrel compared to about $13 per barrel for Saudi Arabian oil.

During the energy crisis, which unfolded in the fall of 1973 with the Arab oil embargo, U.S. utilities considered pumping it with a surfactant (a thinner) to Florida and burning it directly in boilers like coal.

As evidence that the oil operation hadn’t been damaged by nationalization, executives proudly told us that PDVSA produced more oil with 12,000 employees than the state oil company of Mexico, PEMEX, produced with 200,000.

In other words, the Venezuelans had been able to resist the temptation to turn the oil company into a kind of social welfare program, employing unneeded droves of people.

Now I read the workforce of PDVSA stands at more than 70,000 and oil production has slipped to about 750,000 barrels a day.

By 1991, the oil shortage which had endured since the Arab oil embargo had eased, and PDVSA was worried about its future and whether its heavy oil could find a wider market.

Particularly, it was worried about the day when it would run out of the lighter crudes and would be left only with its viscous reserves.

Two oil companies have been shipping oil to the United States during the time of revolution and sanctions: Citgo, a PDVSA-owned operator of gas stations in the United States, and Chevron. Both have waivers issued by the United States, although Citgo is under orders to divest and is set to be bought by Elliott Company (owned by Paul Singer, a Trump supporter), which may play a big role going forward in Venezuela as its expertise is in lifting.

About that party on a sandbank. Well, PDVSA wanted to show the press that it could spend money as lavishly as any oil major.

We were flown in a private jet to an island, then transported on speedboats to a sandbank, where a feast worthy of a potentate was set up under tents. The catering staff had been taken off the sandbank, so the effect was that the party had miraculously emerged from the Caribbean Sea.

Postcard from the Queen Mary 2: Holiday Cruise to the Caribbean

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My husband, Llewellyn King, and I chose a Christmas-to-New Year’s cruise on the Queen Mary 2, titled Caribbean Celebration, because there were so many days at sea. We love the feelings of lethargy, languor and disengagement that fill us on those days.

But the sea days — and there were three since we left New York on Dec. 22 — were an irritant to the few children on board who couldn’t wait to get to our first port of call, Charlotte Amalie on St. Thomas, the capital of the U.S. Virgin Islands. I think the prospect of visiting Blackbeard’s Castle on the island was beating out the visions of sugarplums dancing in their heads.

There have been no shortage of sugarplums on the QM2, both edible and inedible. For this cruise, the pastry pros in the galley have rolled out some inspired creations.

On Deck 3, as you walk to the Britannia, the main dining room, there is a corridor-long gingerbread village. Look but don’t pinch off a piece of the white icing-covered picket fence, passengers are gently asked.

At lunch in the King’s Court Buffet on Christmas Day, passengers’ eyes popped at the festive dough decorations and ice sculptures, and shirt buttons popped after eating many helpings of the desserts. They piled plates high with thick slices of cakes — including Black Forest and Bûche de Noel.

I stopped an English lady before she tried to cut into a square cake frosted with royal icing. It was part of one of the buffet decorations.

“That is a fake cake,” I said.

“I saw a German cake, a French cake, but no Christmas cake,” she sighed.

I love that traditional British cake, too. It is packed with dried fruit and plied with brandy or rum for weeks, then covered with a layer of marzipan and royal icing.

I sighed for a second, then I spied mountains of colored marshmallows on a nearby table. I hoped there would be piles of Turkish delight for which I have a passion. Sigh, no. In consolation, I snagged a couple of Quality Street toffee pennies.

The galley chefs have accommodated passengers’ varied tastes and dietary restrictions admirably. But in keeping with The Cunard Line’s British heritage, every day they have offered a full English breakfast (fried eggs, back bacon, Cumberland sausages, mushrooms, tomatoes, black pudding and toast — sigh for some, no fried toast. At lunch, there has been a carvery table with two kinds of roasts, a meat or vegetable stew, various curries, battered cod and chips, even Cornish pasties and small beef and mushroom pies. Sigh for my husband, no beef and kidney pies.

On Dec. 26, Boxing Day, Llewellyn and I met the Chef de Cuisine Willy Guilot. He is a Filipino and has worked on the Queen Mary 2 since she entered service in 2004. We complimented him on the quality of the meals. He said the work had been “crazy” in the galley over Christmas, but he high-beamed at our recognition of it.

For Christmas Day dinner in the Britannia, I chose the traditional turkey with chestnut stuffing and Mrs. Beeton’s Christmas Plum Pudding. I think Isabella Beeton, the Victorian journalist and author of “Mrs. Beeton’s Book of Household Management,” which is more commonly known today as “Mrs. Beeton’s Cookbook,” would have ordered it. She might even have licked what was left of the pudding the custard sauce on the plate.

On my way out of the dining room, I passed by a table where the English lady I had met at lunch was sitting. She smiled at me and pointed to her dessert plate on which there was a crumb of pudding and a drop of custard sauce.

Dancing the night away. Photo: Linda Gasparello

Rudolf Nureyev, the ballet superstar, said, “You live as long as you dance.” Judging from the median age on the elegant Queen’s Room dance floor every night at 9, he got that right.

Last night, the QM2 band played swing music and the floor was alive with pairs of agile ancients dancing all the styles, including the Lindy Hop and the Jive. They had all the moves and the clothes, especially the ladies, who wore full, flowing skirts for twirling.

As they walked off the floor, my husband and I thought they would return to their seats and order a belt. But no, they did about-faces when the band leader said, “You may not want to take your seats, because we’re going to play Benny Goodman’s ‘Sing, Sing, Sing.’ ”

We saw a Chinese couple from Toronto, who we have watched dance other nights in the Queen’s Room, and have gotten to know, return to the floor.

At lunch today, the 86-year-old husband told us that he and his wife have taken ballroom dancing for 14 years with a Russian teacher. His wife said, “She is very strict.”

Six months ago, they both had a fall, but they were determined to dance aboard the QM2 this Christmas and New Year’s. So they danced gently for rehabilitation, but were told not to waltz.

I saw them waltzing one night and assured them, “What happens on the Queen’s Room dance floor, stays on it.”

He said, “My grandmother said, ‘When you are 60 you live in terms of years. When you are 70, in months. And when you are 80, in days.”

I added,“When you are 100, in minutes.” They laughed a little.

They said they want to dance their 80s away — and next Christmas and New Year’s on the same cruise.

Quite unlike cruises we have taken on other lines, the many Chinese couples, young and old, on the QM2 are on the dance floor not at the gaming tables. Every night, they are in heaven, whether dancing cheek to cheek or in the mood to jitterbug.

How Crowdfunding Brought a New Wind Technology to Market

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A California company, Wind Harvest, is in high gear to change the dynamics of wind energy and to vastly improve the economics of wind farms. 

But the company wouldn’t be marketing to large energy users and wind farm operators today if it hadn’t used crowdfunding for its recent rounds of financing. Crowdfunding can get a startup over the hill.

Kevin Wolf, Wind Harvest co-founder and CEO, explained that developers of hardware face a double problem when it comes to financing: The banks won’t finance their customers’ projects until the technology has been certified and, in Wind Harvest’s case, dozens of their unique wind turbines have been operating for at least a year which requires money.

Wolf said, “It takes about two years to complete a ‘technology readiness level,’ unless a company is well-funded. Six months to have all the components arrive, six months to a year to install and fully test the prototype, and then another six months to complete the new design.” Meantime, a team of engineers and the bills have to be paid.

Venture capitalists have shown a decided disinclination to finance hardware, preferring computer-related software products, he said.

But with crowdfunding, often through a special-purpose company, thousands of individuals have become venture capitalists in companies like Wind Harvest. Many of those investors have hit it big. 

Two standout companies which grew into multi-billion dollar ones: Oculus VR and Peloton.

Oculus, the virtual reality technology company, used crowdfunding to raise $250,000 in 2012. Two years later, it was acquired by Facebook for $2 billion.

Peloton, the fitness company, started with crowdfunding of $307,000, achieved a valuation of $8.1 billion its initial public offering, and rose to astronomically high valuations during the Covid pandemic. It has now fallen back considerably, after many difficulties in the fitness industry.

Wind Harvest is essentially offering new infrastructure which, should it catch on, would give it a steady and fairly predictable path forward as both a wind turbine Original Equipment Manufacturer and as a renewable energy project developer.

The company’s product, trademarked as Wind Harvester, is a vertical-axis wind turbine (VAWT): The drive shaft and the electrical generator are aligned vertical to the ground. In traditional wind turbines, those components are horizontal to the ground. 

The most famous vertical-axis wind turbine is the Darrieus, named after a French engineer who patented it in 1926. It has an elegant, eggbeater shape almost like a fine outdoor sculpture. But it ran into problems with vibration and other technical drawbacks and wasn’t a commercial success.

At the outset of the energy crisis in 1973, Sandia National Laboratory in New Mexico, one of the jewels in the crown of the national laboratory system, did considerable theoretical work on wind turbines, concentrating on vertical-axis designs. But when the research was moved to another laboratory, the horizontal-axis wind turbine (HAWT) became the focus.

The codes developed at Sandia are foundational to the Wind Harvest design. Wolf explained that the choice between VAWTs and HAWTs isn’t an either-or choice, except where wind shears are high and wind near the ground slows down. Then tall, horizontal-axis wind turbines have the advantage.

Wind Harvest turbines are designed to capture the wind on ridgelines, hills and mountain passes where wind funnels and accelerates turbines under the tall horizontal-axis turbines. VAWTs can take advantage of the powerful wind that swirls around near the ground. This turbulent wind at the surface is an unused resource now.

With the bottom of their blades between 25 feet and 50 feet off the ground and installed in pairs 3 feet apart from each, Wind Harvest turbines can double the output of electricity from a wind farm while still leaving enough clearance for agriculture, whether it is grazing animals or growing crops. So, add efficiency to the virtues of these turbines: better use of the wind resources, land and infrastructure. 

Thanks to crowdfunding in four tranches, Wind Harvest is now ready to go to market with utility scale installations.

Wolf listed these additional virtues for VAWTs: 

  • They can be entirely made in America. Right now their blades are extruded by Step-G in Germany.
  • They are designed to withstand the 180 mph wind gusts from a Category 5 hurricane.
  • Because they are short, they can use larger permanent magnet generators (PMGs) not made of rare earth magnets. For example, their PMGs can use ferrite magnets which are iron-based. 
  • Wind Harvest installations have a fatigue life of 75 years with maintenance and periodic refurbishment. Most turbines now in use must be replaced after about 25 years.

The first Wind Harvesters to be put into service are planned for a dredge spoil-created peninsula on St. Croix, the largest of the U.S. Virgin Islands, located in the Caribbean Sea. The entire output of the first phase of the project will be bought by the oil refinery adjacent to the project site and replace the burning of costly propane for generation.

Big ideas now have funding sources besides “Shark Tank,” venture capital, and the banks.

The Back Story of the Breakfast Banana

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To you, the banana may be a fruit that you slice onto your cereal at breakfast. To me it is a slice of history, an examination of a moral dilemma, and an explanation of why the government grows bigger. It is also a tale of mortality because the banana, as we know it, is facing extinction.

Let us begin at the end: The banana that we now enjoy, called the Cavendish, has already been wiped out by Panama disease–a lethal fungus prevalent in Asia and Australia. In the near future, that varietal is expected to be under attack in the large growing areas of the Caribbean and Central America.

The trouble is that the banana cannot fight back: It cannot mutate to meet the new threat in the normal way of plants because the cultivated banana is a clone. Evolution interruptus.

Before the Cavendish was the choice of exporters around the world, there was the Gros Michel banana. But in the 1950s, it fell victim to Panama disease and the Cavendish, in many ways an inferior fruit, had to be substituted.

Bananas, which originated in Asia thousands of years ago, somehow made their way to Africa, and Arab slave traders brought them to the New World. The global banana trade got underway in the 1870s, when entrepreneurs found that they could pick bananas green and they would ripen on their way to market.

American foreign policy in Central America became captive to the banana companies, most famously the United Fruit Company. While the banana trade was a blessing to the campesinos of Central America, it enslaved them to the companies. To support the banana trade the United States invaded, threatened, cajoled and buttressed dictators. The governance of Colombia, Costa Rica, Guatemala, Honduras, Nicaragua and Panama reaped the trade benefits, but paid the price of banana dominance. The banana traders, particularly United Fruit, now known as Chiquita, were vilified in Europe as America’s neocolonial exploiters.

But the truth is more complicated.

In his masterpiece “One Hundred Years of Solitude,” Gabriel Garcia Marquez, the great Colombian novelist and Nobel laureate, wrote poignantly about the Colombian government’s massacre of striking banana workers. But in his memoirs “Living to Tell the Tale,” Marquez also refers to the hope in rural Colombia that United Fruit would return after it had ceased operations in the aftermath of the massacre.

The banana, a nutritious fruit, has often had a bitter harvest. While the United States placed the so-called banana republics of Central America as in its sphere of influence, Europeans, particularly the British, became possessive of banana producers in their Caribbean colonies. As these colonies gained their independence, Europe sought to assist development in the Caribbean by establishing floor prices for bananas. This led to a trade war with the United States, which began in 1993 and ended in 2001.

The banana wars may not be over.

Large fruit exporters, like Dole and Chiquita, with assistance from U.S. laboratories and universities, are seeking to bioengineer the banana to protect it from Panama disease and other lethal attackers that can threaten it at any time. But Europe opposes bioengineered foods and bans their import. Will the Europeans turn their backs on the bioengineered version of a banana that they have known for 140 years? Will they fight U.S. fruit companies that want access to European markets?

The banana, seemingly so benign, illustrates the complexity of foreign relations, the unintended consequences of commodity dependence in poor countries, and why the U.S. government grows like Topsy. Before the banana crisis is resolved, the government will hire more scientists, let more research contracts, and beef up the diplomatic corps with banana trade experts. Banana policy is a slippery business.