Chavez's mismanagement of his oil-based economy.

[robcon]

Venezuela's oil output slumps under Hugo Chavez

Venezuela's daily oil production has fallen by a quarter since President Hugo Chavez won power, depriving his "Bolivarian Revolution" of much of the benefit of the global boom in oil prices.

To win allies and forge an anti-American front, Mr Chavez sells oil to friendly countries at low prices. Ironically, the only big customer buying Venezuelan oil at the full market price is the United States, which the president routinely denounces as the "Empire".

"As production falls, the sales to the US become more important," said Pietro Donatello, an oil analyst from Latin Petroleum in the capital, Caracas. "Only the US is paying the full amount for Venezuelan oil and in cash, the rest are in some kind of barter agreements."...

...The company now grows food after Mr Chavez's price controls emptied supermarket shelves of products like milk and eggs. Another branch produces furniture and domestic appliances in an effort to stem the flow of imports. What PDVSA seems unable to do is produce more oil.

Venezuela has proven reserves of 80 billion barrels, but estimates suggest that it may possess 142 billion barrels - more than anywhere else except Saudi Arabia. But the crude is of low quality and must be upgraded before it can be shipped. There are only three upgrade units currently operating, processing only 600,000 barrels per day.

"There is a bottleneck in the Venezuelan production system," said Mazhar al-Sheridah, 68, an oil expert at the Central University of Venezuela. "It will cost at least $32 billion to build another three upgrading units and take some five years, meaning that Venezuelan production is stuck at current levels for a while yet."

All this means that Venezuela has missed much of the benefit from the oil boom and, now that prices are falling, Mr Chavez faces huge financial problems. Nobody is sure at what point his government would be unable to pay its bills, but most sources consulted believe this would probably happen if oil falls to $80 a barrel. Yesterday, oil was trading at $79.80.
http://www.telegraph.co.uk/news/worldnews/southamerica/venezuela/3183417/Venezuelas-oil-output-slumps-under-Hugo-Chavez.html

[RB TexLa]

1. It would just be time to steal more property from the citizens

[HelenWheels]

4. Stealing from the wealthy

Seems to me Chavez is reclaiming property from the wealthy land lords and giving it to the poor. Sounds like a deal to me. I don't believe anything the US or Great Britain say about Chavez. It wasn't too long ago the US had an unsuccessful uprising against Chavez.
Aren't China and Russia buying oil from Chavez? The US and GB should keep their noses out of the South American countries with legally elected leaders. We've got big enough messes to clean up at home.

[thunder rising]

2. I really glad UK is on the other side of the Atlantic. We don't need three ultra conservative lying

POS governments on this side.

[Arctic Dave]

3. I have been in the oil field for a while and

I don't think I've heard of an "upgrading units".

"There is a bottleneck in the Venezuelan production system," said Mazhar al-Sheridah, 68, an oil expert at the Central University of Venezuela. "It will cost at least $32 billion to and take some five years, meaning that Venezuelan production is stuck at current levels for a while yet."

If is only going to take them 32 billion and five years to have more oil come on line that is pretty good, since it would take about ten years to do it Alaska.

[Peace Patriot]

5. This is utter Corpo/fascist 'news' monopoly B.S.

See
"Hey Look Who's Going to Ride Out The Whole Global Money Thingy Better Than You"
http://www.borev.net/2008/10/hey_look_whos_going_to_ride_ou.html

and

"Venezuela, and why $70/bbl is enough in 2009"
http://incakolanews.blogspot.com/2008/10/venezuela-and-why-70bbl-is-enough-in.html

-----

On Venezuela, we really MUST find alternative news sources to the Corpo/fascist 'news' monopolies. I've found Inca Kola to be excellent on economic issues, and BoRev is a refreshing--often hilarious--site that ridicules Corpo/fascist 'news' on the South American left. Basic rule of thumb on Corpo/fascist 'news': Chavez and Venezuela = Iraq WMDs. The lies, disinformation, psyops and propaganda are unfrackingbelievable, not to mention worrisome as standard preliminaries to war.

Inca Kola provides a detailed, documented, lucid analysis of Venezuela's economy. One other thing that should be pointed out is that Venezuela is a member of OPEC, which sets oil production quotas.

Also, there could be no better way to spend oil profits than on bootstrapping the poor--which is what Chavez is doing. An economy can only eat so many yachts and third mansions for Exxon Mobil execs. Then it crashes. That is what we are seeing, writ large--and Venezuela has a better chance than any country of riding out this greed induced meltdown, and may have also helped insulate its region from much of the shock. "Shock and awe" hit them ten years ago. Democratic systems in South America--which are, in many respects, far better and more transparent than our own--rallied to that "neoliberal"-induced crisis, and a veritable "senate" of FDR's were elected as presidents of South American countries all over the continent--in Venezuela, Brazil, Argentina, Bolivia, Ecuador, Uruguay, Paraguay and Chile (a peaceful, democratic, leftist movement that is now moving north, into Nicaragua, Honduras, El Salvador and Guatemala). These South American leaders have spurred creation of UNASUR, the South American "Common Market" (sans the U.S.), which is pursuing goals of Latin American sovereignty, political/economic integration and social justice. They have the resources (oil, gas, minerals, forests, fresh water, etc.), the workforce hungry for decent jobs, and the excitement and spirit of democratic change, to become the powerhouse of the western hemisphere. We should be joining them--as respectful, equal partners, also committed to social justice--instead spewing lies and hatred in their direction.

[Peace Patriot]

6. Venezuela has $38 billion in cash reserves...

Inca Kola's final two points:

"BUT WAIT, THERE'S MORE! Oil production is about to go up by 200,000bbl/d thanks to new fields coming on line (because all that recent investment from Norway, Brazil, Iran, Portugal, Russia, China etc isn't just lip-service; they are actually truly ramping production and it starts to come on line very soon). This means that exports are likely to be in the 2.3 to 2.4mbbl/d ballpark in 2009. And by checking that chart again, even U$75 oil covers all obligations once other exports are factored in.

"AND THEN FINALLY, there's the one thing Maza Zavala definitely didn't want to mention. In the course of the recent oil boom, Venezuela has squirreled away international currency reserves to the tune of U$38Bn. So if there is any shortfall in the balance of payments, Venezuela does not have to go to the world market and float very expensive new debt paper (that would start a rather nasty vicious circle). It can easily cover obligations by tapping reserves or even buying back its own debt instead of rolling it over. After all, the 'safety net' of international reserves is designed to help out at exactly that kind of moment. So if necessary, Venezuela can use up to $10Bn of reserves in 2009, taking the pressure off oil revenues and allowing a $70/bbl average to be enough to pay its way."

[ensho]

7. true - neo con spin - thay hate Chavez and want to bring him down

Chavez has one upped the neo cons and they can't stand it.