Oil Crisis in Venezuela
...and Curacao. With all this plants around the world, Petroleos de Venezuela increased petroleum income to $ 53.7 billion in 2000 versus $ 9.1 billion for the year 1976. Deducting all the costs, net earnings of Petroleos de Venezuela in 2000 were $ 19.4 billion, and the state took $ 15.4 billion which represents 79%. The rest of the money was used to reinvest in Petroleos de Venezuela (Williams, 2003). Now Venezuela is over depended of the petroleum industry relying around 30% of GDP, 80% of total exports, and 50% of the government revenues. All these numbers can describe without a doubt that Petroleos de Venezuela during its years of operations has been an excellent performance company. Its management has been first class, a fact that recognized publications of high prestige in the international petroleum community (CIA, 2003). Venezuelan oil crisis: The crisis began as a politic issue. Corruption, inefficiency, economic depression and incapacity of President Chavez and his government originated a popular movement of the majority of the Venezuelans. Also inside Petroleos de Venezuela, the most important and profitable industry in Venezuela, Chavez wanted to take control and enforce his authority. Chavez tried to impose on Petroleos de Venezuela a board made up of persons better known for the loyalty to the government than for their managerial qualities. In fact, the government has changed the president and the board of Petroleos de Venezuela five times in less than 4 years (Coronel, 2003). As a consequence of this action, 18,000 workers of Petroleos de Venezuela from the total of 34,000 participated in a National strike against Chavez government on December 03, 2002. So, for first time in 26 years of existence, the Venezuelan Oil sector was involved in political matters (February registers near-record oil price, 2003). From this time, the immense problems started. The Oil industry in Venezuela stopped almost completely. According to Coronel (2003), “Oil production went down to about 200,000 b/d from 3 million during the first 2 weeks of December. Tankers stopped transporting oil. Refineries were shut down. Offices were vacated. Within days gasoline started to disappear from gas stations all over the country” (p. 22). After one month of crisis the oil production barely increased to 480,000 b/d, anti-Chavez, and 890,000 b/d, pro-Chavez (Williams, 2003). For the beginning of the strike, Venezuela could handle the situation with the gasoline and crude oil they had in stock. After three week of Oil strike, the government could not satisfy the 500,000 barrels of normal gas they consume in the country and had to buy the fuel from foreign companies. The same thing happened with the crude, Venezuela could not produce the normal amount of crude oil it used to and had to buy the petroleum from third parties to satisfy the clients (Venezuela crisis persists, 2003). Chavez’ reaction against the oil crisis was to fire the 18,000 people that enjoyed the strike. This was an excellent opportunity for the Chavez’ government to exercise absolute political and financial control over Petroleos de Venezuela. Some observers are concern about the future of Petroleos de Venezuela knowing the professional and technical knowledge that left the company. Even though is amazing what the still workers of PDVSA have accomplished in light of the number of people Petroleos de Venezuela lost, it is uncertain a what long-term cost (Coronel, 2003). According to Rodriguez Araque, the actual president of Petroleos de Venezuela, the workers of Petroleos de Venezuela took an unintelligent decision doing the strike. The fired workers will be substituted and the company will be to normal operations after February 2003 (Venezuela crisis persists, 2003). The impact of the oil crisis in terms of revenues for Venezuela is a catastrophe. According to Oil & Gas Journal article, the effects of the strike will cut national average annual production by 23% in 2003 a disaster for a country that relies on oil for around 25% of GDP, 80% of total exports, and 50% of government revenues (“Venezuela costs international majors”, p.6, 2003). The other direct consequence is the social and labor problem that has been created for all the fired workers of the Oil Industry. The unemployment increased and the whole economy of the country slowed down. Impact of the Venezuelan crisis over the world Venezuela’s oil industry always has been one of the most confident suppliers of the world. Also, they have been present to fill the lack of the market when the Arabic countries have problems (Guisti, 1995). Due that Venezuela before the crisis was the number five country with more Oil reserves in the World, the number 4 with highest oil exports and the number 5 of highest production, had made Venezuela one of the most important supplier for the oil market in the world (CIA, 2003). The Venezuelan oil crisis affected the oil market in two ways. First the real impact due to the drop of production for about 2 million barrels per day, and second, the psychological impact over the markets due to uncerta...