How did oil-rich Venezuela run out of gas? One word: Socialism. It’s all there right in the title.
How did it come to this?
Spoiler alert — Socialist governments tend to get greedy, nationalize industry and realize (only too late) that they have no idea how to make them work.
Venezuelan residents line up for hours to get gas:
This isn’t a service station, it’s an out-of-service station:
Way back in 2012, Reuters reported this:
In 14 years in office, Chavez has nationalized major swaths of the OPEC nation’s economy as part of a socialist agenda.
Venezuelans expect more takeovers to come, possibly in the banking, health and food sectors.
…Chavez has kept pressure up on the private sector in recent months, blaming a “parasitic bourgeoisie” for Venezuela’s recession and 30 percent annualized inflation,
He has threatened to nationalize Polar, the top brewer and food processor in the country of 30 million. The government has also seized a bank belonging to an owner of the leading opposition TV station and put an arrest warrant out for his partner, who is now on the run.
‘Parasitic Bourgoisie’. Right. This is the same Chavez who’s daughter wound up mysteriously being among the wealthiest people in the entire world.
Maybe the pattern sounds familiar:
So there are primarily two related causes that have resulted in the steep decline of Venezuela’s oil production, despite the sharp increase in the country’s proved reserves. The first is the removal of expertise required to develop the country’s heavy oil. This started with the firing of PDVSA employees in 2003 and continued with pushing international expertise out of the country in 2007.
…Second, the Chávez government failed to appreciate the level of capital expenditures required to continue developing the country’s oil. This was in no small part due to inexperience among the Chávez loyalists that were now running PDVSA, but it may not have mattered in any case. When oil prices were high, Chávez saw billions of dollars that could be siphoned to fund the country’s social programs, and that’s exactly what he did. But he failed to reinvest adequately in this capital-intensive industry.
…So, can Chávez under-invest in the industry while diverting money to his pet causes? He can for a while, but you can see the results. Despite having enormous oil reserves, he and his cronies are running Venezuela’s oil industry right into the ground. His generosity to the poor has only been possible because he had a goose that laid golden eggs because they constantly reinvested money back into the business. Once he kills the goose, where is he going to get the money to continue his programs?
The next time Bernie Bros come calling, and Pelosi talks about the Armageddon and the 1%… remind them about this story.
Becuase the names, nations and industries may change, but the song remains the same.
Does your grandpa go off on paltry politicians, whether they be Democrats or Republicans? Does he get misty eyed when he talks about God and Country and America’s future? And have you ever heard him scream, ‘Awww … Hell no!’ when Rosie O’Donnell starts yapping on television? If you answered yes to one, or all of the above, then your gramps will love Doug Giles’ latest book, My Grandpa Is A Patriotic Badass.
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Even Mark Twain wanted to drain the swamp!
“Politicians are like diapers; they need to be changed often and for the same reason” – Mark Twain.
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