Hugo Chavez is talking a tough game, challenging the USA, and the Bush Administration in particular, all over the globe. He’s rallying leaders in Latin America, meeting with ‘rogues’ world-wide, and even calling Bush the “devil” at the UN.

But he’s got a problem. In a fascinating story, The Washington Post reported that:

[A] new study of trade and oil consumption data shows that Venezuela appears ever more dependent on selling its oil to the country Chávez calls “the cruelest, most terrible, most cynical, most murderous empire that has existed.” And U.S. government energy trade data show the United States is slightly less dependent on Venezuela, which at one time challenged Canada, Mexico and Saudi Arabia as the No. 1 provider of foreign oil but now tussles with up-and-coming Nigeria for the fourth spot.

Chavez is able to run such a strong Anti-US campaign because he is flush with cash from the high price of Venezuela’s exported Oil. But, more and more, the source of that cash is the very enemy he’s railing against. Despite his anti-US policies, he’s become more dependent on the voracious US appetite for Oil.

Yet the country’s once-vaunted oil industry has seen its production and capacity to produce decline over the last decade, according to oil analysts and statistics from the U.S. Energy Department and the International Energy Agency in Paris.

The world’s fourth-largest oil exporter a decade ago, Venezuela is now seventh, according to the BP Statistical Review of World Energy. The 1.1 million barrels of crude that Venezuela exports to the United States every day amount to less than 11 percent of American imports, down from 17.3 percent in 1996. By contrast, the No. 1 supplier to the American market, Canada, is now sending more than 1.8 million barrels a day and topped 2 million barrels daily in November.

During most of Chávez’s eight years in office, more than 60 percent of the country’s total crude exports have gone to the United States, up from 50 percent throughout much of the 1990s, according to Ramón Espinasa, a former chief economist at PDVSA who is now a consultant in Washington. The trend is due to growing U.S. demand, Venezuela’s rising consumption and what oil analysts say is the state’s inability to diversify its base of clients to include big consumers.

As Chavez spends money helping his global political pals, he’s investing less in his national Oil company. The nasty secret about Venezuela’s Oil is that, though bountiful, is really thick, like sludge. Unlike Saudi light sweet crude which is easy to refine anywhere in the world, Venezuelan heavy crude is so heavy that only select refineries dedicated to processing such a heavy grade of Oil, can handle it.

So a country less capable of producing oil, analysts say, is more tied to the United States, where refineries wholly or partly owned by PDVSA refine Venezuela’s molasses-like oil. The installations exist nowhere else, which makes some analysts skeptical that Venezuela is exporting as much to China as it claims.

“It’s three months by tanker to China, five days to the East Coast of the United States, so the American client is too important for Venezuela.”

So, at any point, the US could end Chavez’s antics with a simple Oil embargo. He’s got no where else to send his product. Would it hurt? Maybe a little (though with gas already over $3.00/gallon, I guess we can tolerate more than most people ever thought we could…), but it would hurt him a heck of a lot worse than it would hurt us.