While it wouldn’t appear so at the moment, Venezuela is one of the most resource-rich countries on the planet.
Venezuela contains the world’s largest proven oil reserves, even beating Saudi Arabia by a large margin when it comes to oil. Despite this, oil production has plummeted in Venezuela as the country’s political and economic crisis grows worse. So, what happened to Venezuela’s oil?
Massive oil reserves were discovered in Venezuela in the 1920s, shifting the country’s economic focus from coffee to oil exports over time. Many kilometers of oil pipelines run across the country, but they are now in disrepair as the Venezuelan government is broke and incapable of maintaining the country’s energy infrastructure. The result has been massive pollution and a halt to most oil production. In fact, Venezuelan oil production has fallen over 70% in the last two decades.
Venezuela’s state oil company used to produce 80,000 barrels per day, but it’s now producing nothing. There are a couple keys to understanding why this has happened. First, there was the political and economic crisis that started creeping up on the country after the death of former leader Hugo Chavez. The following political turmoil took a toll on the economy, so much so that even the country’s cash cow, state-owned oil company PDVSA, no longer has the resources to perform anything beyond the most basic tasks. Instead of properly repairing pipelines, employees have just painted them over, leading to damage and a halt in production.
Many in Venezuela remember a time a few decades ago when food insecurity wasn’t a big problem. As the country continued growing more corrupt, inefficiency led to the economic conditions you can see today. While Chavez may have been a popular leader, the socialist government failed to use the country’s great wealth for investment back into PDVSA as corruption increased year-by-year. After food started becoming scarce, workers in the oil industry stopped working. As the situation grew more dire, the workers started walking off the job in much larger numbers, typically taking trucks, tools, and whatever was available from their employer, PDVSA.
At the moment, the Maduro government is relying on money from China and Russia to attempt to repair energy infrastructure and return PDVSA to the productive state it was once in. Unfortunately, the economic crisis has grown so bad that career criminals have complained to several news outlets that there is nothing for them to steal. As long as even thieves are out of work, it will remain difficult to restore Venezuela’s oil industry.
