Author Archives: fullb927

PDVSA’s Contributions to State Grow Significantly

A recent Reuters report revealed that PDVSA’s contributions to the state over the span of 2011 have tripled those of 2010.  The report states that funds being transferred to the Bolivarian Missions have doubled in 2011 (reaching $8.5 billion) and that Chavez’s new program, “Great Housing Mission” received $2.4 billion.  However, without discussing what Chavez’s social “missions” are or their track record of success the article does little to explain the actual significance of this increase.

The Bolivarian Missions are written off as “social projects” that have “assured Chavez’s popularity among the poor” without explaining how exactly these programs have been able to achieve such support.  Looking at the declining unemployment, growing female labor participation rate, and increasing primary education attendance, the budget’s focus on such programs is encouraging.  Although the drastic increase in spending may be a campaign move by Chavez, no more support would be gleaned if the programs proved to be ineffective.

Agreeably, the article closes alluding to the growing pressure being placed on the national oil company, making note of it’s growing debt and increasing need for investment.  As operating costs rise and government’s dependence on PDVSA funding for programs grows we’re left wondering how much longer the company can carry on.

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Filed under Bolivarian Mission, economy, Hugo Chavez, PDVSA, Politics

Lopez “barred” by Supreme Court

A few posts back, I had celebrated the Inter-American Court of Human Right’s (IACHR) ruling putting an end to political disqualifications in the region.  Unfortunately, this ruling has had little bearing in Venezuela.  The Supreme court, supposedly filled with supporters of President Chavez, declared that the IACHR ruling was “not executable.”  However, justices welcomed Lopez to sign up for elections without clarifying whether or not Lopez could serve as president if elected.

Chavez publicly criticized the IACHR last month stating that the system “protects the corrupt and obeys the mandate of the imperial power.”  The effects of Lopez’s barring are yet to be seen, however some speculate that this ruling could impact the opposition leader’s campaign adversely.

http://www.npr.org/templates/story/story.php?storyId=141442343

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Venezuela’s Oil Industry: at a Glance

Venezuela is the world’s 11th largest net oil exporter. To understand the country’s economy it is necessary to have a grasp of it’s oil industry.  Below I have provided information that I feel is crucial to understanding Venezuela’s oil industry.

In comparison to other countries in the Western Hemisphere, Venezuela has the largest amount of oil reserves and produces about 2.36 million barrels a day.  [1 Barrel = 42 US Gallons]

Reserves and Production

Of the 19.1 billion barrels of oil Venezuela has in its reserves, an average of 2.36 million barrels are produced everyday.  As we can see below, this amount has been falling for the past 10 years.

Total Oil Supply

Which begs the question, why is it that Venezuela is slowing production?  As one of the United State’s main suppliers of oil, it appears that the US is weaning itself off of Venezuelan oil, reasons which shall be explained in a later post.  In reaction to this decline Venezuela has looked to diversify its export destinations.

Export Destinations

Although the USEIA does not have all the data for the past 3 years, we can see an overall trend of declining exports and increased domestic consumption.

Exports

Domestic Consumption

Knowing that oil revenues account for 95% of total export earnings for the country this data is does not look promising for Venezuela’s economic future.  The GDP growth rates for the past three years are evidence of this impending problem.  In 2010 the country experienced -1.9% growth in the GDP, a slight increase from the -3.3% growth in 2009.  With US demand for oil on the decline Venezuela is up against a two-fold issue of necessary diversification.  1st, there needs to be an increase in markets for Venezuelan oil, 2nd, the country needs to begin diversifying domestic industry to steer away from the impending (perhaps already arrived) case of  “Dutch Disease.”

Sources:

https://www.cia.gov/library/publications/the-world-factbook/geos/ve.html

http://www.eia.gov/countries/country-data.cfm?fips=VE

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Filed under Oil, Oil Revenue, PDVSA

The End of Political Disqualification

In March of this year the Inter-American Court of Human Rights (IACHR) began hearings to investigate the political disqualification of many opposition leaders looking to participate in Venezuelan elections.  Among those testifying was Leopoldo Lopez, one of Venezuela’s most prominent opposition leaders who was recently banned due to corruption charges.  In a court hearing, Lopez spoke out against political disqualification stating that bans threaten the future of democracy in the Venezuela.

The IACHR responded accordingly.  In early September the court ruled to put an end to all political disqualifications.  Lopez, in a press conference following the ruling stated,  “This is a ruling with a hemispheric impact, with an influence in similar cases in Colombia, Ecuador, Mexico, Peru and Costa Rica (…) But above all, this a strong binding decision for the Venezuelan State under the agreements signed and endorsed in our Constitution pursuant to Articles 23 and 31 (…) This is a decision that democrats will respect and comply with determination and courage, in order to preserve the rights millions of Venezuelans have to choose freely.”

The Venezuela electoral authority (CNE) recently settled on the date for elections, October 7th 2012 (2 month earlier than normal) leaving opposition leaders less time to campaign.

http://www.eluniversal.com/2011/09/16/lopez-political-bans-have-ended-today.shtml

http://www.huffingtonpost.com/leopoldo-lopez/venezuelan-democracy-gets_b_829997.html

http://www.economist.com/node/21530145

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Venezuelan Geography, Demographics, Politics, and Economy

Geography and Environment

Location: Northern South America, bordering both the Caribbean Sea and the North Atlantic.

President: Hugo Chavez (1999-Present) Elections slated for October 2012

Area:
Total: 912,050 sq km
Land: 882,050 sq km
Water:  30,000 sq km
Land use:
Arable Land: 2.85%
Permanent Crops: 0.88%
Other: 96.27%
Irrigated land: 5,800 sq km
Land Boundaries: 4,993 km
Borders with: Brazil, Colombia, and Guyana

Climate: Tropical – hot, humid; moderate in highlands

Natural Resources: petroleum, natural gas, iron ore, gold, bauxite, various minerals, hydro-power, diamonds

Environmental issues:  sewage pollution in Lago De Valencia; oil and urban pollution in Lago de Maracaibo; deforestation; soil degradations; urban and industrial pollution particularly along the Caribbean coast; irresponsible mining operations threaten rainforest ecosystem

Society and Government

Population: 27,635,743 – 45th most populous country in the world
Age Structure:  
0 – 14: 29.5% (male 4,149,781/female 4,002,931)
15 – 64: 65.1% (male 8,846,945/female 9,130,561)
65 and older: 5.4% (male 665,436/female 840,089)
Median Age: 26.1 (male 25.4/female 26.8)

Ethnic Groups: Spanish, Italian, Portuguese, Arab, German, African, indigenous people

Religions: Roman Catholic 96%, Protestant 2%, other 2%

Urbanization:
Urban Population: 93% of total population lives in urban centers
Rate of urbanization: 1.7% annual rate of change

Major Cities: Caracas (capital city) 3.051 million; Maracaibo 2.153 million; Valencia 1.738 million; Barquisimeto 1.159 million; Maracay 1.04 million

Maternal Mortality Rate: 68 deaths/100,00 live births
Infant Mortality Rate: total 20.62 deaths/1,00 live births (95th highest mortality rate in the world)
Life expectancy at birth: total 73.93 years (110 highest life expectancy rate in the world)

Literacy:
Definition: age 15 and over can read and write
Total Population: 93%
Male: 93.3%
Female: 92.7%

Government Type: federal republic
Administrative Division: 23 states, 1 capital district
Independence: July 5, 1811 (from Spain)
Constitution: December 30, 1999
Suffrage: 18 years of age; universal

Current concerns: weakening democratic institutions, political polarization, politicized military, drug related violence (particularly along the border with Colombia).  The country’s over dependence on petroleum industry is also cause for concern given the constant price fluctuations and irresponsible mining operations.

Economy

Brief Overview: Highly dependent on oil revenues (accounts for 95% of export earnings, 55% of federal budget revenues, and 30% GDP).  Chavez working to increase government control of economy by nationalizing agribusiness, financial, construction, oil and steel firms.  The nationalizing of these firms has hurt private investment, reduced capacity for production, and slowed down exports of non-petroleum commodities.

GDP: $345.2 billion (35th highest GDP in the world)
Per Capita: $12,700 (92nd in the world)
Composition by sector: agriculture 4%, industry 36%, services 60%

Labor force: 13.11 million
By occupation: agriculture 4%, industry 36%, services 60%

Unemployment rate: 8.5%

Population below poverty line: 37.9%

Export Partners: US 38.7%, China 7.7%, India 4.8%, Cuba 4.1% ($65.79 billion a year)
Import Partners: US 26.6%, Colombia 11.4%, Brazil 9.6%, China 9.1% ($38.61 billion a year)

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Filed under demographic, economy, geography