Venezuela’s oil output has fallen by almost a third since Chavez took power. That’s why Venezuelan economic growth is pretty underwhelming. Those social programs so beloved of Nation writers came out of investment funds that were previously used to keep oil production high–necessary, as we’ve discussed, because Venezuela’s sludgy crude is hard to get out of the ground. Which gives us a paradox: Venezuela’s reserves are growing, but its production is in decline.
The only reason that the economy isn’t worse is that oil prices have stayed high. But with production falling, Venezuela doesn’t just need high oil prices, but continuously rising oil prices, to keep funding all that government spending. This is why Venezuela has been one of the hawkiest hawks in OPEC, always agitating for tighter quotas and higher prices. A country with falling production doesn’t need to worry about tighter quotas. But they do need to worry that lower prices will throw their budget disastrously out of balance.
Here is more, devastating throughout. Here is the closer:
Politically, what Chavez did was successful. But that success came at the cost of the future. Instead of building a more stable foundation for long-term prosperity, Chavez started cutting chunks out of the house and handing them out to the crowd. Socialists, especially, take note: he essentially destroyed one of the most competent, successful, state run companies in the world. Thirty years from now, that–and not the transitory social programs that were thereby funded–will be his real legacy to Venezuela.