What Is Happening To Venezuela's Oil Money?

I found this information today from Columbus Dispatch, but it's a story hot off the AP wire:

It says a few things I found surprising:

1. The long-term capacity of the U.S.'s No. 4 oil supplier to keep pumping crude is under threat because it is spending more on Chavez's ideological agenda than on badly needed investments, industry analysts say.

2. The company is borrowing billions from international lenders, while independent estimates show its output falling.

3. The health of the company's finances is a subject of debate, mainly because audited financial results have not been publicly released for the past two years.

4. A recent report by the Caracas-based economic institute CIECA estimated that Venezuela's oil company had a net loss of $3.7 billion in 2006, a year when most major oil companies posted record profits.

5.the company handed over about 70 percent of its gross revenue to the state, including $28.7 billion in taxes, royalties and dividends, and $9.9 billion for other social spending.

6. The oil company is also footing the bill for nationalizing power companies and buying majority stakes in oil projects in the Orinoco River region from BP PLC, ExxonMobil Corp., Chevron Corp., ConocoPhillips Co., France's Total SA and Norway's Statoil ASA.

Considering the fact Chavez changed the way foreign oil companies did business in Venezuela so drastically in the last few years, and he himself admits foreign investment in the oil industry was down 55% last year, it is no surprise that now he's pushing for bonds to the tune of 5 billion dollars. This on top of a getting one billion dollar loan from a French bank and 3.5 billion dollars in advance from Japan.

Now, Rafael Ramirez, the oil minister, and Chavez appointed head of PDVSA, says everything is just fine financially. He claims the money is for expansion so they can reach a quota of 5.8 million barrels per day by 2012. The problem with that is they have, for years claimed substantially more output in barrels per day than either OPEC or IEA reports show. While the Venezuelan government has been claiming 3.3 billion barrels per day in output, OPEC and IEA claim it's never been higher than 2.7, and it's really around 2.4 billion barrels. That, to me, is a huge difference. That is 328.5 BILLION barrels a year difference! And it's a myth being perpetuated for years!

Ah, the goose that lays the golden egg is always, it seems, in peril.

There Will Be No Drinking This Holiday Week!

The latest instillation of "President Chavez Goes to Crazyland" is being brought to you by our friends at Polar. In case you didn't know it, Polar is the Venezuelan equivalent of Budweiser. It's the Venezuelan King of Beers.

Last year Hugo Chavez got disgusted at the sight of children unloading crates of beer from the beer trucks in slums. The beer was being sold right off the trucks in the streets. I am under the impression this was actually legal. (Think ice cream truck - without the ice cream.) Last October he ordered the beer trucks off the streets. This seems like a solid decision to me.

Here's where things get downright odd, though. Hugo Chavez is constantly at odds with everyone, thumbing his nose and hurling insults and anyone who questions his often peculiar decisions/mandates/rulings. He's got no respect for the prevalent religion of his country, which is mostly Catholic. When he doesn't like what the church has to say, he's quick to start hurling insults and calling names like the kid in the schoolyard everyone tries to ignore.

But for the upcoming Easter holiday, he's banned sales of alcohol. Is it really about Easter as a religious holiday? No, absolutely not. I don't think he even puts up such pretense. He says this week is a bad week for crime and auto accidents, and he hopes to put a dent in that statistic this year by banning alcohol sales. As of Friday, March 30th, alcohol can only be sold between 10AM and 5PM, throughout the holy week. Then, on Holy Thursday, Good Friday, and Easter Sunday there are to be no sales of alcohol at all.

I note in every article I've read there was absolutely no mention of Saturday. I find it odd. Can they spend Saturday partying like it's 1999?

So, I guess you're good this week if you don't have a job and you start drinking at 10AM. You can party until 5PM! This ban includes bars and restaurants, so dinner and a drink is out this whole week.

So far, it's hard for me to hate the guy for saying "You folks don't need to booze it up over the holiday week." Granted, it puts a damper on the kind of parties some people like to have. But there's a possibility to purchase it during the day, at least through Wednesday. There's no decree against drinking it during the times selling is banned.

What is his motivation, though? Is it to please his Iranian friends, who don't agree with alcohol consumption in the first place?

He has an eighteen month power to rule by decree, not that he really needed it since he holds the congress in his pocket. Now he has Carte Blanche. Something tells me this is not the last, but rather the first in a long line of rulings we will be hearing about in the coming months.