Even though Venezuela has huge reserves of oil, the country has been forced to buy oil elsewhere.
From 2001, the country has poured over $250 billion made from the oil industry into social programs. Venezuela’s successful petroleum industry once fueled the country’s Socialist revolution. But, this has evidently backfired.
Fast forward to today and the country is in complete disarray. Venezuelan citizens are desperately waiting online for hours to get into grocery stores with empty shelves. The lack of resources has created an extensive illegal smuggling network to and from Columbia. And the economy has seen a triple-digit inflation.
The lifeblood of the country, the oil industry has seen a detrimental effect from the socialist rule. Half of the Venezuelans government’s revenues comes from this industry.
But, the oil production has plummeted to only 2.4 million barrels a day, which is a 350,000-barrel decrease from a year ago. This is a million barrels less than in 1998, prior to the socialist movement.
With limited resources, one oil rig was attacked by armed gangs who took as much oil as they could. Another rig sat idle for weeks due to a missing piece of equipment. Not to mention, oil workers are having difficulty surviving on their little salaries and often faint while high in the rigs.
Things have gotten so bad, that the country is buying oil from the United States.
“You call them the empire,” said Luis Centeno, a union leader for the oil workers, referring to the United States, “and yet you’re buying their oil.” He also said the Venezuela’s state oil company has stopped providing new safety equipment.
Venezuela has been losing valuable business. “Now, even Venezuela’s subsidized oil shipments to its vital ally Cuba are slowly being phased out, oil executives with operations in Venezuela contend, forcing Havana to look to Russia for cheap oil,” writes The New York Times.
Formerly, the US has a big market for Venezuela’s oil. However, the tables of turned and the country is being forced to start importing from the US. Starting earlier this year, 50,000 barrels a day of light crude has been shipped to the country to help keep the industry afloat.
But, this isn’t likely to last long. Venezuela’s state oil company, PDVSA is struggling to make payments for the oil imports. Some tankers have even waited two weeks in port for payment and then just leave because they never get it.
The Venezuelan socialist state isn’t only impacting the poverty-stricken citizens, but soon the rest of the world.
“Venezuela accounts for less of the international oil market today, but its exports still make up roughly 2 percent of the world’s output. That means that a serious decline in Venezuelan exports, especially if accompanied by a crisis in Nigeria or Iraq, could tighten the market enough to send oil prices climbing again.,” writes The New York Times.
And the solution? Just to keep borrowing more money. “Venezuela accounts for less of the international oil market today, but its exports still make up roughly 2 percent of the world’s output. That means that a serious decline in Venezuelan exports, especially if accompanied by a crisis in Nigeria or Iraq, could tighten the market enough to send oil prices climbing again,” writes The New York Times.
Author’s note: The situation in Venezuela cannot be patched up by borrowing money. Again, this country is the perfect example proving that socialism doesn’t work. The only way for the country to survive is if socialist ideals no longer rule the state.