Venezuela’s economy failing, plan to seize more foreign assets

| May 12, 2009

Just as an illustration of how twisted and confusing this whole big government concept is, take a look at Venezuela as it’s run by Hugo Chavez. Last year Chavez seized much of the oil and gas industry from foreign investors when oil was selling at $4/gallon here in the US. Now that the price has fallen to half of that, Venezuela is suffering from that decision according to the Washington Times;

The price of Venezuelan crude has shrunk by 55 percent during the past year, and the debt accumulated by government-run oil enterprise PDVSA has grown by 146 percent.

“The oil price is very low; about half the price we budgeted. That is hard and difficult for Venezuela,” said Mr. Chavez.

The National Assembly passed a law Friday allowing the government to take over oil-service contractors, including several American and British firms that are owed up to a year in back fees.

Last week they seized a Tulsa-based company’s assets in Venezuela;

Petroleos de Venezuela SA, the state oil company known as PDVSA, said Monday it took over three gas-compression facilities from Tulsa-based Williams Cos. on May 8, one more than Williams had previously announced.

PDVSA will absorb 163 workers at the facilities, it said Monday in a statement.

The plants, two of which pump natural gas into the ground to increase oil output, are “associated” with about 500,000 barrels of oil production a day, PDVSA said.

Also last week, the rubber-stamp legislature authorized Chavez to take over more industries in addition to the sugar, milk and lumber industries he’s nationalized since last year.

The 39 companies currently providing services to state-run Petroleos de Venezuela SA will be brought under government control under a resolution that took effect Monday after being published in the Official Gazette, the official Bolivarian News Agency reported.

It said the companies affected include Zulia Towing and Barge Company, Gusteca, Premeca, Seatech, and Terminales Maracaibo. The companies provide transport boats and other oil-related services on Lake Maracaibo in western Venezuela.

Chavez claims that taking over these companies will allow him to cut energy costs – the government taking over industries doesn’t cut costs for consumers, which Chavez should have learned by taking over the oil industry. Of course he blames Venezuelans for the failure of the oil industry to turn a profit, so he fires them and brings in foreign labor;

Mr. Chavez ordered his military to seize paralyzed installations, and he brought in oil workers from India, Libya and Iran to restart drilling rigs and refineries as he fired more than 17,000 PDVSA employees.

While Bloomberg reports that Venezuelan bond prices fall. That should be helpful for the economy – he’ll pay foreigners low wages while Venezuelans sit on unemployment lines. In the meantime, the rhetoric continues. At Flopping Aces, Curt posts a video of Chavez telling a crowd of laborers that “The rich are evil….The rich aren’t human. The rich are animals in human form.”

The way things are going, the only rich in Venezuela will be Chavez and his inner circle. Oh, and did I mention that Hezbollah has a presence in Venezuela? And that presence includes running some of the drug trade in the area?

Category: Barack Obama/Joe Biden, Foreign Policy, Hugo Chavez, Terror War

Comments (5)

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  1. GI JANE says:

    “Also last week, the rubber-stamp legislature authorized Chavez to take over more industries in addition to the sugar, milk and lumber industries he’s nationalized since last year.”

    That sounds suspiciously like what’s happening here in America. Welcome to the USSA.

  2. Claymore says:

    How do you say “douchebag” in Spanish? Burrito?

  3. NHSparky says:

    The only difference between Obama and Chavez is that one can’t speak Spanish worth a damn, despite telling us our children need to learn it. How far are we fro collapsing just like Venezuela?

  4. Old Tanker says:

    With GM and Chrysler shutting down for most of the summer the suppliers here in Michigan will start going under more quickly than they have been(I know, I used to be at one). That means parts shortages for the start up. Let’s see if the suppliers start getting “bailouts” so that there are no shortages (or that automakers go overseas to get parts) Of course we know what bailouts mean……take over!!

  5. B Woodman says:

    BOOOOMMM!!! Watch the pretty red and black plume of flame & smoke light up the sky. . . .
    I said it before & I’ll say it again. If I was a manager of a US oil facility in a foreign country, that would be my answer to Chavez’s attampt to take over my company’s facility without paying fair market value. If you want it intact, you can pay for it – in hard currency. If you want it without paying for it, you can have it – in a million flaming pieces all over the landscape. As well as watching your precious oil & gas resources going up, and up, and up. . .