Venezuela’s oil production has been on a downtrend for decades, but now it is collapsing, having hitting a three-decade low last month as economic turmoil has almost halted the nation’s output of its most precious resource.
In a touch of irony, while the last oil bear market plunged the nation’s finance into disarray, now oil prices have recovered – and if Venezuela could have maintained even its late-1990s output, it would mean around an additional $2.9 billion in revenue, assuming $60 per barrel oil.
So, what exactly happened? It can be summed up in one word: socialism.
Commenting about the nation’s collapsed oil production and economic demise, Stephen Schork, publisher of the Schork Report, told FOX Business’ Maria Bartiromo during “Mornings with Maria” that any Bernie Sanders supporters should take note that this is the “inevitable outcome of socialism.”
The country’s socialist leaders overspent for years, in part to maintain the favor of the lower class. Then, when oil prices collapsed, the drop in revenue made it impossible to keep the house of cards standing.
Venezuelans are starving, and business had come to a near halt. Unfortunately, the country has the resources to generate more revenue, but not the capability to do so. To put even more salt in the wound, as Venezuelan oil output has collapsed, other producers have more than made up for the slack. This means that going forward, even if the country is able to ramp out its oil output, it faces fresh competition for market share.