Socialist Venezuela, which has the world’s largest proven oil reserves, is out of gasoline

By —— Bio and Archives--December 28, 2017

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Socialist Venezuela, which has the world's largest proven oil reserves, is out of gasoline

I want to say that, sure, there has to come a point when ever those most determined to believe in socialism will see enough stories like this and be forced to reckon with the truth. But we all know better than that, don’t we? When you’re a true believer in something, there’s always another explanation apart from the one that would shake the foundations of your belief system.

Pretty tough to do in the case of the world’s most oil-rich nation running out of gas, but give them a few hours of watching MSNBC or reading the New York Times, and they’ll come up with a way to explain this away too:

According to the Organization of the Petroleum Exporting Countries, the highest proven oil reservesin the world, including non-conventional oil deposits, are in Venezuela.

“Gentlemen: There is no more gasoline in Venezuela. In Venezuela, we are out of gas. In Venezuela, there is no gas oil. In Venezuela, there are no lube oils,” said Iván Freites in a televised press conference. Freites is the secretary of the professional and technician division of the United Federation of Venezuelan Petroleum Workers.

Iván Freites, secretary of the professional and technician division of the United Federation of Venezuelan Petroleum Workers.

In his address, Freites said that poor management led to the stoppage of 80 per cent of the country’s refineries. “Only Amuay and Cardón refineries are operative and that is nothing. They produce 40,000 barrels per day and the national demand is over 200,000 barrels of gas per day,” he said.

Venezuela’s oil production has fallen to levels not seeing since the late-1980s. According to the latest OPEC report, which is based on information provided by the Nicolás Maduro government, the country is producing about 2.3 million barrels of oil per day. In October, it experienced the steepest fall in production of 2017, as only 1.9 million barrels were extracted, 130,000 barrels less than the previous month. The oil industry, however, is still the major source of income as it generates about 96 per cent of the foreign exchange.

“Can you imagine how much it would be to bring our refineries back to operation? To recover production in the Eastern Coast of the Lake (of Maracaibo)?” Iván Freites asked during the media brief. He blamed corrupt government officials for the fuel crisis and dismissed the theory that it is all due to the sanctions that Donald Trump imposed on some key figures in the Venezuelan cabinet.

See? It’s all Donald Trump’s fault! That didn’t take long.

But of course, this is the inevitable result of socialism’s basic economic incentive system - or disincentive as the case may be. In a free economy, producers and refiners would be able to compete on price and market access to sell gasoline to consumers. They’d have to balance the interest in profits with the reality that you can only charge what people can and will pay. And the more competition there is, the better it is for consumers because consumer choice is what empowers the individual buyer to demand a reasonable price for goods.

In socialist Venezuela, the state controls the petroleum resources and commandeers them for the benefit of the political class, while severely limiting the freedom of producers, refiners and distributors to profit off the sale of oil-related products. It also uses oil resources to prop up its otherwise worthless currency, and in some cases to manage the debt that the country lacks the cash to properly retire.

There is little incentive within the private economy to engage in oil production because there’s little to no potential to profit from it. And with the state taking priority over the demands of the market, the public’s needs for gas takes a back seat to the agenda of the political class.

So with such little incentive to produce, refine or distribute oil-related products - and such little freedom to do so profitably even if you wanted to - a nation that is theoretically rich with oil resources has literally run out of gas.

If you’ve followed the travails of Venezuela under the Chavez/Maduro regime at all, you know this story isn’t limited to gasoline. The country faces a shortage of everything from food and milk to toilet paper, and the entire situation is self-inflicted by a government that seizes private businesses and restricts their ability to operate profitably. This is the inevitable result of socialism, and the dreamy Millennials who are demanding it here really should look across the globe to learn about what’s happened in countries that got the very thing they want.

But then, it would hardly matter to people to won’t learn what they don’t want to know.

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Dan Calabrese -- Bio and Archives | Comments

Dan Calabrese’s column is distributed by HermanCain.com, which can be found at HermanCain

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