Investor’s Business Daily has an amazing editorial today suggesting that oil prices have probably peaked. It cites significant trading activity showing that some very big players are selling oil stocks like a herd of panicked elephants, unafraid to take losses now – because they know the losses are going to be bigger later. It’s really interesting stuff because this paper knows how to read stock markets in a systemic way and implicitly forecasts very well.

If this reading is correct, Hugo Chavez of Venezuela is finally in for some very bad times. Right now he has held onto power not through popularity but through the high price of oil. Those oil earnings have been his tyrant’s premium, enabling him to oppress, wreck and ruin his once-vibrant country, as well as spread his influence abroad, with no apparent consequences. He’s flung money all over the hemisphere, and supported the moribund government of Cuba as well.

All of that could come crashing down hard if the price of oil topples. He’s made a bet it wouldn’t – hence, his actions. He’s also taunted the West that it wouldn’t happen. But now he seems to be desperately trying to gun up the price of oil, saying he knows the U.S. is going to invade and if so, oil prices will go sky-high. What does he mean by that? We have heard it before and he knows we have heard it before. I think he is trying to manipulate the market. Because he knows an oil-price tumble is coming.

Gustavo Coronel has a powerful new essay on the already-shoddy state of finances of PDVSA, the Venezuelan state oil company, a pristine company when he was a board director with it, but now a tattered, bush-league, crummy shadow of its once-gleaming self since the Chavez takeover. He discusses the falling production, the dodgy balance sheets and the intransparency, all of which are preventing Venezuela from taking advantage of record-high oil prices in any meaningful way. Just imagine what would happen if oil prices fell? Read it here.

All of this could be adding up to very bad times ahead for Hugo Chavez. Keep an eye on him and what he’s doing, he may well know the gig is up and either grow more aggressive with his enemies, or stash more money abroad along with his cronies. Maybe both. Falling oil prices are his worst nightmare. Could cheap oil be conducive to democratic revolution? I think it could.