The future of Venezuela
Posted by Charles II on January 10, 2013
The essential points are that:
* when Chavez took over, things were in terrible shape
* the price of oil is much higher now than before Chavez took office
* things are not great now
One interpretation (Shifter) is that Chavez got lucky over the price of oil but otherwise squandered his time in office. The other interpretation is that Chavez was lucky in the price of oil, but unlucky in having the opposition he had, that his first few years in office were a loss due to factors outside his control, but that lately he’s done much better. This view is supported by Weisbrot and Johnston (see Fig. 1).
The one interesting issue raised by Shifter is the decline in Venezuelan production of oil (and natural gas). These are issues important to social stability, since natural gas is used for electrical generation (insufficient production = blackouts), and Venezuelans expect cheap gasoline. Euan Mearns at The Oil Drum says
OPEC stalwart and heavy weight Venezuela has had flat production over the decade of between 2 and 2.5 mmbpd. The impact of the 2002/ 03 general strike upon production is clear to see. Production has been hitting near term highs over 2.5 mmbpd and spare capacity is essentially zero.
What seems to be limiting oil production is a shortage of natural gas, as well as a decline in readily-accessible reserves in favor of the Orinoco Basin heavy crude similar to the Canadian tar sands. So, it’s not clear to me that Shifter’s criticism is valid, except insofar as it rests on the endemic corruption in Venezuelan society that makes it harder to do anything. The story of why they are producing more nat gas sounds like an example of that.
Another interesting issue raised in the debate is what the factions within chavismo are. Basically it seems that there are two principal factions, a civil society movement led by Nicolas Maduro, and a military faction led by Diosdado Cabello.
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