What Happens to Venezuelan Oil When Chavez is Gone?

From The Kansas City Star

By Sean Cockerham

The end of Hugo Chavez could mean big changes for the struggling state-owned Venezuelan oil industry, which drives its nation’s economy, provides the money for Chavez’s export of socialism, and has helped prop up Cuba through subsidies of hugely discounted oil.

Chavez, who is possibly in his final days after cancer-related surgery in Cuba, has used the state-owned oil company Petroleos de Venezuela SA as a cash cow to bankroll social welfare programs for his country and to give cheap oil to favored countries. But in the meantime, the country’s oil production has dropped, and Venezuela is forced to import gasoline from the United States despite reportedly having the largest crude oil reserves of any nation on the planet.

“Chavez squandered probably Venezuela’s best opportunity to really make some significant wealth,” said Phil Flynn, senior energy analyst at Price Futures Group. “If you look at the Venezuelan oil industry, it’s dilapidated compared to where it should be.”

The fate of Venezuelan oil has broad implications for Latin America and the world, with Chavez giving oil on generous terms not only to allies such as Cuba and Nicaragua, but to countries throughout the Caribbean and Central America through the Petrocaribe program. Oil has helped Chavez spread his socialist gospel and challenge U.S. dominance in the region.

The 58-year-old Chavez has not been seen or heard from publicly since a serious operation in Cuba more than a month ago, his fourth surgery since being diagnosed with an unspecified type of pelvic cancer on June 8, 2011. He missed his inauguration last week for a new six-year term. Venezuelan officials maintain Chavez’s condition is improving but he’s “in battle.” If Chavez is unable to take office, Venezuela’s constitution says there must be new elections within 30 days.

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