fbpx

Latest Posts

Home

Facebook

Twitter

Search
About

America Is Partially Responsible for Venezuelan Crisis, But Not In The Way Representative Omar Thinks

Representative Omar is in the news regarding her statements that U.S. actions are making the situation in Venezuela worse. On Democracy Now, Representative Omar stated:

““This particular bullying and the use of sanctions to eventually intervene and make regime change really does not help the people of countries like Venezuela, and it certainly does not help and is not in the interest of the United States,” she added.”

I don’t disagree that it is possible for efforts to enact regime changes can have unforeseen and negative consequences, but there is a simpler explanation for Venezuela’s downfall than sanctions and conspiracy. These explanations are socialism, and American oil production.

Venezuela has the largest oil reserves in the world, and oil production was consistently high, but this began to change in 2016. Now, Venezuela is not even in the top ten for oil-producing countries, ranking 11th in 2018.

Coincidentally, oil production in the U.S. skyrocketed after 2010, and now hydraulic fracturing and horizontal drilling has made #Merica the largest oil producing country in the world.

The surge in U.S. oil production caused prices to crater. After peaking at more than $114 per barrel of oil in September 2014, oil prices have never recovered, and that is bad news for countries that were dependent upon oil revenues to maintain government spending. Enter Venezuela.

 

In 2014, it was estimated that Venezuela needed oil prices to be $121 per barrel in order to balance its budget. It is possible to paper over deficits when oil is above $100 per barrel, but the dramatic fall in oil prices caused by hydraulic fracturing exposed the gross mismanagement that socialism enables, and once the oil money was diminished, Venezuela started its tailspin.

Maybe it’s just my energy lens that is coloring my interpretation of the situation on the ground, but American fracking did have a significant impact on the “workers paradise” of Venezuela. But that doesn’t mean they are responsible for the carnage that has ensued.

When oil prices dropped, American oil companies got innovative, cut costs, and looked for ways to optimize their business models. Because they are private companies, they have the most to lose if they can’t solve the problems they face. Government-run oil companies in Venezuela, on the other hand, can explain away failure because they are creatures of the state with no competition. Slowly but surely, the country with the largest oil reserves in the world saw their share of the wold petroleum markets whither away.

 

Comments

Subscribe

Categories

Upcoming Events

  • Lunch Forum with Amity Shlaes

    Location: Hyatt Regency Minneapolis 1300 Nicollet Mall Minneapolis, MN 55403

    Buy tickets HERE. About This Event: Enjoy our Early Bird Ticket Special through February 23rd! After this date, ticket price will increase to $30. Doors open at 11:30 AM, program and lunch begin at Noon. In Great Society, the New York Times bestselling author of The Forgotten Man and Coolidgeoffers a stunning revision of our last great period of idealism, the 1960s, with burning relevance for our contemporary challenges. Today, a battle rages in our country. Many Americans are attracted to socialism and economic redistribution while opponents of those ideas argue for purer capitalism. In the 1960s, Americans sought the…

    Register Now
  • Morning in Minnesota Breakfast Series: Moorhead

    Location: Moorhead Country Club 2101 North River Drive, Moorhead, MN, 56560

    Join Center of the American Experiment Friday, February 21 at the Moorhead Country Club for a FREE breakfast with policy fellow Isaac Orr.

    Register Now
  • 2020 Annual Dinner Featuring Sarah Huckabee Sanders

    Location: Minneapolis Convention Center Ballroom 1301 2nd Ave S Minneapolis, MN 55403

    American President: The Unorthodox Approach to Politics that Changed the World. Sarah Huckabee Sanders served as White House Press Secretary for President Donald J. Trump from 2017 to 2019. A trusted confidant of the President, Sanders advised him on everything from press and communications strategy to personnel and policy. For two and a half years, Sanders was at the President’s side, battling with the media, working with lawmakers and CEOs, and staffing the President on every foreign trip, including dozens of meetings with foreign leaders. Sanders is only the third woman and the first mother to hold the job of…

    Register Now