Chávez Running On Fumes? -- Foreign Policy BlogPolitical scientist Gustavo Coronel, an oil expert and former member of the Venezuelan congress, believes the plummeting petroleum payouts will seal the fate of Hugo Chávez's Bolivarian dreams, thanks to the Venezuelan leader's habitual failure to invest in any form of state infrastructure.
Speaking at the Andes colloquium organized by the George Washington University and the Strategic Studies Insitute, Coronel explained just how deep mismanagement runs within the state-run oil sector. This threw me for a bit of a loop:
"Under Chávez the company [PDVSA] has lost about 500,000 barrels per day of production capacity, which amounts to a loss of income of about $30 to $50 million a day, depending on the price."
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My Comment: Hugo Chavez will probably stay in power for a very long time .... but his dream of spreading the revolution in Latin America is about to end. With high oil prices it was easy for him to play Santa Clause with petrol dollars .... but for the short to medium term this is about to end. Promises are going to be broken, and his allies in other countries are going to feel the pinch.
For Venezuela itself, failure to invest in infrastructure will be felt in the next few years. Bad roads, electricity brown-outs, and water/medical health care services declining will be the first signs of problems. But the immediate impact will be in the oil sector itself. With no major oil company now investing in Venezuela, the oil industry infrastructure will ... like what has happened in Iran .... start to fall apart. This is going to hurt the poor and the dependent in Venezuela very quickly .... the very base that Hugo Chavez depends on to always win election.