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Response to Omaha Steve (Original post)

Thu May 16, 2013, 10:09 AM

26. Their biggest problem is declining oil production

During his presidency, Chavez diverted much of that potential wealth to Venezuelan consumers in the form of cheap gasoline (18 cents per gallon or less). He propped up the Castro regime in Cuba, and he offered Venezuelan oil on highly preferential terms to 18 Caribbean and Latin American countries through an energy alliance he called PetroCaribe.

Oil production in Venezuela declined sharply under the Chavez administration, however, largely due to inadequate investment in the energy infrastructure, inefficiencies in oil industry management, and the replacement of skilled oil technicians and managers with political loyalists.

The drop in oil production — more than 7 percent just in the first quarter of 2013 — is severe enough to call into question whether the Chavista oil welfare programs can be sustained. For the Caribbean and Latin American countries that have been benefiting from the PetroCaribe program, it is a time of great anxiety.

"In 1997, PDVSA was producing 3.5 million barrels a day," notes Piñon, now an energy analyst at the University of Texas at Austin. "Today they are about 2.8 million barrels a day. It shows you what a bad job the Venezuelan government has done in managing their national oil company."


http://www.npr.org/2013/04/11/176843567/venezuela-s-next-leader-faces-tough-choice-on-oil-program

They are screwed if oil prices remain steady. They are really screwed if oil prices go down.

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