Venezuela has the world’s largest proven oil reserves and yet the country has run out of gasoline. The socialist government has lost the capacity to extract oil from the ground or refine it into a usable form. The industry’s gradual deterioration was 18 years in the making, tracing back to then-President Hugo Chávez’s 2003 decision to fire the oil industry’s most experienced engineers in an act of petty political retribution.
The near-total collapse in the nation’s oil output in the ensuing years is a stark reminder that the most valuable commodity isn’t a natural resource, but the human expertise to put it to productive use.
It really is quite incredible. They have the largest oil reserves in the world and they have run out of petrol.
The little gas that is still available comes via periodic shipments from Iran. But the Venezuelan government doesn’t officially charge at most gas stations. It uses a quota system, so filling a tank can mean waiting in line for days.
Back to the USSR!
“PDVSA once had over 20 refineries around the world,” says José Toro Hardy, an economist and former director at PDVSA from 1996-1999. “We were able to move our oil from the nation’s subsoil into the tanks of American drivers,” he said. “And the entire process was managed by Venezuelan entities with Venezuelan oil wells, pipelines, Venezuelan tankers…We had built something gigantic, but suddenly, we were faced with a costly historic accident: Hugo Chávez won the election.
Chávez held power from 1999 to 2013, when he died of cancer. He dubbed his policy agenda “socialism of the 21st century.” It turned one of the most prosperous countries in Latin America into the site of a humanitarian crisis. Chávez rewrote the constitution, clamped down on the freedom of the press, nationalized over a thousand private companies, and destroyed the national currency through hyperinflation.
And at least the people have equality – everyone is in poverty.