Downfall

Quick, what country has the world's biggest supply of proven oil reserves? Saudi Arabia? America? Russia? No. As you may remember from previous posts, it's Venezuela.

But Venezuela's daily production is far from big. Compare to the American state of Texas: Venezuela was producing much more than Texas til ~2013. Then Texas production soared and Venezuela's eventually tumbled.

image: carpe diem

In 1998, Venezuela's daily oil production was at the highest level in this chart's time frame. Then socialist Hugo Chavez took office as president in 1999, and by 2004 he had fired 19,0000 striking employees of the state-owned oil company, a severe blow to productivity. He replaced them with people more loyal to his government.

The government had invited companies like Chevron, BP, ExxonMobil, and others to help develop Venezuela's state-owned oil business. Those companies invested billions of dollars into technology, equipment and infrastructure - then Chavez changed the deal to get more profit, and some left the country.

So that's a short version of the downfall of Venezuela's economy. They lost expertise (the firing of the 19,000) and then lost investment (as well as expertise) in the oil companies who pulled out.

from "Charting the Decline of Venezuela's Oil Industry"

(cont'd tomorrow)