According to an article in The Telegraph, Venezuela's oil production has dropped by 25% since El Presidente Hugo Chávez seized absolute power. The government oil company, Petróleos de Venezuela, S. A. (PDVSA), produced 3.2 million barrels per day B. C. (Before Chávez), and is currently producing only 2.4 million A.D. (After Dictatorship).
The article mentions three factors associated with the drop:
- A production bottleneck: Venezuela produces low-grade crude which has to be processed before shipping, and the three existing facilities for doing that cannot keep up.
- The "Petrocaribe" club: Chávez has made deals with his "friends" to allow them to pay only 30% up front for their Venezuelan oil imports, with the rest spread over payments spanning decades. (The United States is the only one of Venezuela's customers paying full price.)
- Loss of focus: PDVSA is no longer just an oil company, it has also been charged with performing completely unrelated activities like growing food and making furniture and appliances.
The processing problem is the most straightforward matter—capacity must be increased. Of course, socialism is not known for its industrial production, the marquee example being the communist Soviet Union having to import food despite controlling the Ukraine, a region fertile enough to feed the entire world. Chávez's fellow Petrocaribe socialists compound that problem by ensuring that many of the funds necessary to pay for new facilities will only be arriving in dribs and drabs, if at all, and the recent crude price plummet makes each barrel of Venezuelan oil bring in less revenue. So it's not likely Venezuela will see that increased processing capacity any time soon. In addition, the Chávez regime making PDVSA
central to the social battle for the advance of [the] country by subjecting it to his whims can only bring about further reductions in the country's oil output. Of course, there are undoubtedly other factors not mentioned in the article.
All this is simply the result of socialism and dictatorship. As in all such governments, Chávez has substituted central control (in this case, his bizarre personal judgment) for the thinking of millions of individuals whose freedom, still limited B.C. but by comparison infinitely greater than A.D., made Venezuela one of the top oil producing countries on earth. With Chávez in charge, the country will inevitably lose that status.