Sunday, 14 August 2011

For how long can Venezuela be a parasite nation?

$ per barrel, projection with 10% price increase: This is unlikely to remain for so long
Venezuela has experienced the longest oil boom in its history. The Chávez regime has been able to cling to power thanks to that. And yet the military regime has become so inefficient, so corrupt, that it does not only need high oil prices, but permanently higher oil prices. How sustainable is that? 

Let's imagine oil prices increase now on average 10% per year. As I have written before, that would be enough to keep Venezuela from getting back into recession. It is very doubtful that the trend can keep itself for many years: a threshold will be reached that would move us towards a definite fuel shift. This fuel shift won't be complete in a year or two but once it gets started, it will set itself forth and Venezuela will start to get less dollars for each barrel.

Unfortunately, no one in Venezuela is talking about this. This is bad. Someone within the alternative forces has to have the courage to tell the population Venezuela is not really a badly managed rich country.

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