Eating the seed corn. From Reuters.
Even with oil at $100 per barrel, Venezuela's leftist President Hugo Chavez faces a continued slump in the nation's energy industry that could slow his oil-financed campaign to create a socialist society.
Still recovering from defeat in a December referendum that would have let him run indefinitely for reelection, Chavez is likely in 2008 to struggle with falling productivity in the oil industry, which provides around half of government revenues.
Oil sector GDP shrank by 5.3 percent in 2007, according to central bank figures, extending a decline of 14.7 percent since Chavez was elected in 1998 despite oil prices jumping from near record lows to historic highs in the same period.
The figure does not necessarily reflect Venezuela's oil income, which has soared on record prices, but rather demonstrates changes in the total amount of production, transport and processing of oil and gas.
Economists say oil GDP is falling because of massive spending of energy revenues -- state oil company PDVSA paid out more than $13 billion for social programs in 2006 -- that keeps Chavez popular but leads to industry underinvestment. ...
Global energy agencies say Venezuela, the fourth-largest exporter of oil to the United States, is only producing around 2.4 million barrels per day -- 20 percent below official figures of close to 3 million bpd.
PDVSA continues to suffer repeated operational problems, with a growing number of outages at the company's refineries.