What Happens to Oil if Chavez Goes?

From Market Watch

By Myra P. Saefong

As Venezuelan President Hugo Chavez’s health worsens, uncertainty surrounding his regime and control over his nation’s oil is on the rise.

News reports Friday said the ailing Chavez is fighting a lung infection and suffering from respiratory failure following cancer surgery in Cuba last month. Chavez is due to be inaugurated on Jan. 10 to a new presidential term.

And while he’s been the nation’s leader since 1999, he hasn’t been able to make the most of Venezuela’s vast oil reserves.

“Venezuelan [oil] production has suffered under Chavez,” said Phil Flynn, senior market analyst at Price Futures Group. He “ruined the Venezuelan oil industry by breaking contracts with oil companies and taking money out to fund his socialist revolution … production has fallen far short of what it should have been.”

Data show Venezuela produces around 2.2 million barrels of crude oil per day, down from almost 3.5 million when Chavez took office in 1999, according to James Williams, energy economist at WTRG Economics.

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