Oil in Venezuela

We will first look at the United State's roles in the world oil chain in order to more fully understand what the stakes are in this war of dependency. America holds 2% of the world's oil reserves, contributes 8% to the production of oil and consumes a staggering 33% of the total world consumption [3]. This is an amazing amount for just one country alone to consume. If we look at how economics are supposed to work we will find that supply needs to equal demand. Our supply does equal our demand currently, but is largely imported. Right now America is only supplying 8% of the global production, while taking a massive third of the total consumption. Our supply comes almost completely from overseas, meaning that major oil producers, such as Saudi Arabia or Iraq, control a major role in our economy. This is a major weakness to the US as we will have little control over this precious resource and we are at the hands and will of the suppliers. Below is a chart showing the breakdown of America's uses of oil by sector.

Oil has often been referred to as any economy’s lifeblood. Although this is an overemphasis, oil has been the key, nonhuman resource of the economy throughout the largest part of the 20th century. In the book “The Prize: The Epic Quest for Oil, Money, And Power” by Daniel Yergin, the author illustrates the political, societal, economic, and geo-strategic importance of this product.

Venezuela’s reputation has been well established regarding its supply of oil and how it was being used for medicinal use and other purposes. It was not until the first oil well was drilled in 1912, when Venezuela became the world’s second largest oil producer behind the US, and the world’s largest oil exporter (Wilpert, 2003). With the well drill in the country it attracted many major oil producers that wanted a piece of anything they could get. The Royal Dutch Shell and Rockefeller’s Standard Oil became the main producers of the oil and maintained a high status. Everything was going great for the company, “ between 1920 and 1935 oil share’s exports went up from 1.9% to 91.2%”(Wilpert, 2003), but not everything goes according to plan. The country had a dramatic impact towards its economy that many recall, “The Dutch Disease.” “The utmost important magnitude of the Dutch Disease was that agricultural production declined to almost nothing and the country fell behind in industrializing, relative to other Latin American countries” (Wilpert, 2003). Thus, Venezuela had passed a reform oil policy that was the Hydrocarbons Act, which was from the oil revenues based on the income of the mines (Wilpert, 2003), bringing the state’s income to stability.

Mexico and Venezuela are very similar. They both depend on oil and have a warm climate. Mexico is the uppermost country in Latin America. They have a lot of coastline and have a warm semi tropic climate.

According to The CIA World Factbook, “Venezuela remains highly dependent on oil revenues, which account for almost all export earnings, and nearly half of the government’s revenue” (CIA). Though, as opposed to this, the US isn't highly dependent on a single resource as is

is far from independent when it comes to energy, “about 40 percent of U.S. imported petroleum, a significant portion of all the petroleum that provides a third of national energy consumption flows from insecure, progressively more competitive foreign supplies, primarily in the Middle East, Asia, and Africa” (Rosenbaum, 2014 p. 279). This is inherently problematic as the nation relies on this imported oil to power everything from the electrical grid to the military. Sourcing this oil from unstable regions allows for these suppliers to have an unprecedented impact on the everyday operations of both the government and citizens. Furthermore the U.S. must keep good relations with the often-uncooperative nations that supply our foreign oil in order to maintain the supply flow, making this an issue of national security.

Since the oil embargo of 1977, there has been an increased awareness of our nation's energy security. As global population and energy consumption rise, the need for a stable energy supply has become a hot topic and a politically volatile issue. As our negative trade balance grows larger by the day, the United States finds itself in a rather precarious position. We are becoming more and more dependent on Middle East oil.

The U.S. imported $157.8 billion in oil from Mexico and Canada (shale oil).This also reduces U.S. reliance on oil imports from the Middle East and Venezuela. It is especially important now that the U.S. no longer imports oil from . Why? Mexico is a friendly country, whereas Venezuela's president often criticizes the U.S. Both Venezuela and Iran have started selling oil in currencies other than the dollar, contributing to the decline in the dollar's value.

Even before the nation’s collapse the troubles in Venezuela were already surfacing. Up unto the years leading up, the poor and wealthy were treated unequal. The poor, in

Venezuela is also a major oil producer and its economy has been highly dependent of the petroleum. The population as of today is about 29,275,460. Venezuela’s capital is Caracas and its official language is Spanish, as well as some indigenous dialects. The weather in Venezuela is mostly tropical, at times it is hot, humid and becomes more moderate in the highlands. The government type that Venezuela follows is federal republic, with five branches of government such as:

Chávez was elected president in 1998 and made three main promises to the Venezuelan people, convening a Constituent Assembly to write a new constitution and improve the state, fighting poverty and social exclusion, and eliminating corruption. Now about nine years later corruption is a very prominent issue and government corruption is almost at it’s highest point. The nation is in the tight grip of Chávez and almost no chance of escaping. Director of Human Rights Watch's Americas division, José Miguel Vivanco said “For years, President Chávez and his followers have been building a system in which the government has free rein to threaten and punish Venezuelans who

What would happen to Venezuela if the oil disappears? Venezuela is going through a very critical situation in which the economy is being affected. One of the reason why the situation in the economy in Venezuela is so urgent right now is because they are depending 96% on oil. That is one of the reason why in Venezuela, the people can’t buy basic product. To solve this problem, Venezuelans should find a way to expresses their voice in the “Organization of the Petroleum Exporting Countries” (OPEC) because that is the organization that has the power to raise the prices of oil. Another way that this problem can be solved is that Venezuela must stop depending only on oil because, they can use other natural resources which will greatly

The oil-rich Bolivarian Republic of Venezuela, located on the northern coast of South America, was for many decades considered among the wealthiest nations in the entire continent. While having the largest proven oil reserves in the world has often proved a tremendous boon for Venezuela, the very black gold that has been the cause of its success has also proven to repeatedly be its kryptonite. Over half of the nation’s Gross Domestic Product stems from petroleum exports – which equates to approximately 95% of total exports. It is really not too hard to imagine what drastic consequences shifts in global oil prices could have on the economy.

Venezuela is currently facing the worst economic crisis in history. According to the International Monetary Fund, it has negative growth of -8%, the worst in the world and the worst inflation rate (482%). The current unemployment rate is 17% though this figure is expected to climb towards 30%. Venezuela is a country that is reported to have the worlds largest oil supply, a commodity that has a changing price based on supply and demand. Their ability to sell oil was a primary source of revenue for the government. Exporting oil was reported to be around 96 percent of Venezuela's total exports according to the World Bank. In 2014 the

Venezuela has the world’s largest oil reserves and by 1960, it became the wealthiest country in Latin America. Petróleos de Venezuela (PDVSA), the state owned company, was the key to economic and social development in Venezuela under president Hugo Chavez. His government was settled in an environment where the oil prices were rising and the economy was booming, so he was able fund social programs and practices that were popular to the poor masses. This wealthy and growing Venezuela made Chavez to be very popular and his regime very powerful. Oil revenue accounted for nearly 90% of exports, more than 50% of government revenue, and 35% of country’s GDP.