Archive for January 6th, 2008

A picture is worth 10,000 words #36: The country registers eleven consecutive quarters of contraction of oil GDP

January 6, 2008

No graph better depicts the depths of incompetence and lies of the Chavez administration than the one above, where I have plotted the  quarterly change on Venezuela’s oil GDP for the last twelve quarters, using data from the Venezuelan Central Bank. With the fourth quarter of 2007, we now have had 11 quarters in a row of contracting oil GDP in Venezuela, now that “PDVSA es de Todos” (PDVSA belongs to all of us, Government slogan since the oil strike in 2002/03). Even more worrisome, note that there seems to be a very clear trend down in the graph above.

When you combine the graph above with my estimates of the country’s gasoline consumption, the picture gets even scarier: In a country where we have always been dependent and have become even more so on oil income, we are producing less oil and using more ourselves as the Government irresponsible subsidizes the price of gasoline at 1.7 US$ cents per liter (6.4 cents per gallon at the swap rate or 16.6 US$ cents per gallon at the official rate of exchange) as well as the price of cars, which are imported at the official exchange rate for the benefit only of the well to do.

The graph above also proves in very direct fashion how the Government continues to deceive and lie about the status of the Venezuelan oil industry. While the IEA and OPEC give lowering estimates of Venezuela’s oil production, the Government maintains that production is stable at 3.3 million barrels of oil a day, which contrasts with OPEC’s 2.386 million barrels for November and IEA’s 2.43 million barrels for the same month.

The graph above presents a very bleak picture for the future of our country. Those that support Chavez should open their eyes in the face of such lies and deceit. It is quite simple, the Venezuelan oil industry is being damaged and destroyed for the sake of politics and we are not being told the truth. For those that do not support the Government, the message is also simple: Getting rid of Chavez will not solve the problems magically, there is real and serious damage being done to the country’s production capabilities and PDVSA’s financial situation is strained at a time that little is being invested in maintenance and increasing production. In fact, from the 2006 financials (what little is published these days by PDVSA) it would appear as if most of the “investment” that year was the purchase of the oil service partners, which in the means there was little investment.

Ironically, Minsiter of Oil and Energy Rafael Ramirez who holds also the Presidency of PDVSA was ratified this week in both positions by President Chavez, despite the fact that he has singlehandedly presided over the management of the country’s oil resources during these three years of contracting oil GDP.