Oil king Venezuela? Is Saudi Arabia's mere possession of much oil the central reason it is the most pivotal energy player on the planet? Observed through the prism of Venezuela, the answer is no. BP's 2012 Statistical Review of World Energy, the bible of the energy industry, was released this week, and makes official something that OPEC asserted months ago -- Venezuela has surpassed Saudi, and become the world's largest reserve of oil. With 296 billion barrels, Venezuela has 18 percent of the oil on the planet; Saudi Arabia, with 265 billion barrels, has 16 percent (Canada's 175 billion barrels make it third, with 11 percent of the global total). Yet, oil is one sphere where possession is not nine-tenths of the law. Saudi Arabia remains king because of what it does and, more important, can do with its oil. For starters, the Saudis are the world's biggest oil exporters (10.1 million barrels a day in April); Venezuela exported 2.1 million barrels of oil a day, the seventh in rank, according to OPEC. But the more salient factor is Saudi's residual capability -- it is the sole country able to add meaningful daily volumes to global production in a pinch; Venezuela's spare production capacity is effectively zero. And that factor -- spare capacity -- is pivotal in the stability, or lack of, in global energy. When the world knows that there is oil to be had regardless of what calamity ensues, it can go and worry about other matters. Conversely, when spare oil production capacity becomes razor-thin, the world fixates on petroleum; prices go through the roof. Conclusion: Little sleep was lost this week in the kingly palaces of Saudi Arabia.

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When Patrick Duddy, the former U.S. ambassador to Venezuela, thinks about the ailing Venezuelan president, Hugo Chavez, he is reminded of the 1961 epic El Cid. In the climatic finish, a dead hero's men, fearing they cannot defeat North African invaders without him, secure his corpse upon his horse, and send it onto the battlefield in order to intimidate their enemies. Sure enough, the dead El Cid's Castillian army goes on to final victory.

With seven months to go until October presidential elections, Chavez returned to Caracas over the weekend after a second cancer operation in Havana. Chavez's health has thrown the election into disarray, raising questions about what will happen not only in Venezuela should he be incapacitated, but in the country's projection of influence around the region. Until 2008, Chavez, fueled by the income of some 2.5 million barrels of oil exports a day, provided hundreds of millions of dollars of support for Colombia's hyper-violent rebel opposition FARC movement. Venezuela also was a key to cocaine smuggling. Meanwhile, Chavez has had a tense relationship with foreign oil companies during his 13 years of power, sometimes nationalizing their fields, or unilaterally changing contractual terms. ExxonMobil and ConocoPhillips left the country.

On arriving home, Chavez sang and danced with his daughter on a balcony (pictured above), a demonstration of rigor intended to dispel talk that, despite chemotherapy he is to undergo, he is not up to the challenge of a tough campaign. "The beating we're going to give the Venezuelan right will be memorable ... not just in the history of Venezuela but in almost all the world," Reuters quoted Chavez as telling the crowd.

Duddy is sure of only one thing -- that, whether or not Chavez is healthy, he will in fact appear as the ruling candidate for president on Oct. 7. There simply is no serious alternative in the Chavista camp to face the popular opposition candidate, Henrique Capriles Radonski. And there is too much at stake in the way of power and wealth to leave victory to chance.

"I think they're going to try to stick with Chavez to the very end," Duddy told me. "And they think [they will triumph] through a combination of aggressive spending on the social program, incessant election publicity. They dominate the [broadcast media]. They have immense resources. They're going to put those resources to use in the serve of the president's campaign for re-election."

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If Venezuelan President Hugo Chavez is forced to drop his bid for re-election for health reasons, will the primary repercussion for the West be the exit of a voluble thorn in the side? Perhaps, but it will also mean the prospect of yet more newly available oil reserves -- on top of the widely projected U.S. shale oil bonanza. The takeaway: If the shale oil projections are accurate, and Chavez leaves politics under whatever scenario, we have the prospect of a geopolitical shakeup analogous to what has accompanied the rise of shale gas.

Venezuela has the largest proven oil reserves on the planet -- 296 billion barrels, according to OPEC figures. The number is slightly misleading: Saudi Arabia's 264 billion barrels are higher quality and cheaper to produce than the extremely heavy crude of Venezuela's Orinoco Basin; yet Venezuela's reserves are so massive that such details almost don't matter.

The trouble has been that, since Chavez took power 13 years ago, Venezuela's oil production has fallen to 3 million barrels a day, 16 percent less than the 3.5 million barrels a day it produced in the 1990s. This has resulted from Chavez forcing out key members of the skilled labor force and management of the state oil company, known as PDVSA, and his marginalizing of the other source of oil patch expertise -- foreign oil companies such as Chevron and Shell.

Yesterday however, Chavez said his cancer may have recurred, reports the Associated Press -- he must go to Cuba for further treatment and scale back his frenetic pace. That bodes ominous for his attempt to hold back a groundswell of apparent support for Henrique Capriles (pictured above), his 39-year-old opponent in October elections. What distinguishes Venezuela from some other petro-states -- Russia, Kazakhstan, Azerbaijan and Iran among them -- is that power can actually change hands through the ballot box. So even though polls show Chavez with sustained popularity, he still must win. Capriles already was a serious challenger, and now he is more so.

Capriles has already said that, if elected, he will boost oil production. He also has suggested that foreign expertise will be permitted back into the country.

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A new middle class - the other commodities story: Share prices have surged in recent years for agriculture, metals and energy companies, and traders betting long on the commodities sold by these companies have been rewarded richly as well. Now the Wall Street Journal finds a far more dramatic impact across borders -- Eric Bellman reports that the boom in palm oil (seeds pictured above), cocoa, rubber, coal and more has created a new or larger middle class in countries like Brazil, Indonesia, Malaysia and Thailand. In Indonesia, writes Bellman, "rubber tappers, cocoa pickers, coal miners and other rural laborers have in some cases seen their incomes more than triple in the last three years, making the workers' wealthier than some city residents and putting them on the radar of such multinational consumer-goods makers as Honda Motor Co. and Unilever."  Of course, if you are not engaged in palm-oil farming or other commodities businesses, you are probably hurting with high prices. The palm oil boom has also caused deforestation in Indonesia. But Bellman quotes figures from the Asian Development Bank that from 1999 to 2009, Indonesia's middle class doubled to 93 million people, or 40 percent of the population of 229 million people.

The trouble in Greenland: Shell has gotten provisional approval to drill for oil offshore from Alaska's North Slope in the Arctic Ocean. After five years and $4 billion in spending, Shell is pretty thrilled. Oil booms can be exciting, but there is something other-worldly about the hoopla surrounding the Arctic, which every large oil company on the planet, not to mention the leaders of a few states such as Russia, appears unabashedly eager to develop as the next big frontier. The ice-melting impact of global warming is opening up the Arctic Circle, the location of 25 percent of the world's remaining oil and gas reserves, according to the U.S. Geological Survey. But earlier this week, we got a reminder that the arrival of a sloshy ice pack doesn't make this forbidding region easy to work in. Cairn Energy, which had already faced creatively angry activists from Greenpeace, says it is abandoning a dry hole it has drilled on Greenland's west coast, one of four wells costing $600 million that the British company plans in the country. The company says it's going ahead with the other wells. ExxonMobil, Chevron and Encana Corp. also hold drilling licenses there. As for Shell and Alaska, this is just the first major hurdle.

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