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Like watching your sister’s kids go to pot

September 10, 2014

The more news I read from Venezuela, the more anti-socialist (or anti-statist, to be clearer) object lessons I see.

To set the scene, Venezuela is a member of OPEC – that’s the Organization of the Petroleum Exporting Countries. And Venezuela used to export a fair amount of oil. But here’s a graph of its production for the last 50 years — which is down by about 1/3 in the last 15 — so now Venezuela’s ready to start importing oil.

Not to put too fine a point on it, but you’ll recall that el señor Chávez was first elected in 1999.

oil-production-venezuela
(Graph from EnergyInsights.net.)

Venezuela Set To Import Oil

The management acumen of Venezuela’s President Nicolas Maduro continues to amaze. Reuters:

Algeria is in talks to export crude oil to fellow OPEC member Venezuela, Algerian Energy Minister Youcef Yousfi said on Tuesday, confirming a Reuters report. […]

“Yes, we are in talks,” Yousfi told Reuters when asked whether Algeria was planning to export crude oil to Venezuela. He declined to provide details.

More details come care of the Miami Herald:

It turns out that Venezuela’s own production of light crudes has plummeted since the late President Hugo Chávez took office in 1999, and the country desperately needs light crudes to blend with its Orinoco Basin extra heavy crude oils. Without such a blend, the Orinoco Basin’s extra heavy crude is too dense to be transported through pipelines to Venezuelan ports and exported abroad.

Venezuela’s oil production, which accounts for 95 percent of the country’s export earnings, should be used in world classrooms as a textbook case of what happens when a populist government starts distributing a country’s wealth in cash subsidies, without investing in maintenance and innovation. Much like happened with Cuba’s once flourishing sugar industry, Venezuela’s Chávez-inspired populism has destroyed the goose that laid the golden eggs.

In 1999, when Chávez took office, PDVSA had 51,000 employees and produced 63 barrels of crude a day per employee. Fifteen years later, PDVSA had 140,000 employees, and produced 20 barrels of crude a day per employee, according to an Aug. 14 report by the France Press news agency. […]

There was a popular riddle bandied about the Soviet Union back in communist days that went something like this: Question: if the Soviet Union conquered the Sahara, what would happen? Answer: nothing for 50 years, then a shortage of sand.

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