Venezuela Cannot Pay a Tulsa Company's Bill

[guido911]

Chavez the deadbeat. Hopefully this will bring down that scumbag.

http://news.yahoo.com/s/ap/20090206/ap_on_re_la_am_ca/lt_venezuela_oil_1

[cannon_fodder]

quote:Oil accounts for 94 percent of Venezuela's exports and funds nearly half the socialist government's budget, and Chavez uses it to bankroll an international aid bonanza, showering allies with cheap fuel, refining projects and cash donations.

But U.S. contractor Helmerich & Payne Inc. said last week that it has stopped drilling with two of its 11 oil rigs in Venezuela because of delayed payments. The Tulsa, Oklahoma, company says it will stop three more rigs by the end of February and the rest by the end of July if PDVSA doesn't begin to pay off a debt it puts at nearly $100 million.

Ouch. Just when Hugo is begging oil companies to come back to fix the oil industry.  Idiot.  He could have sucked a TON of money from those companies over the last 4 or 5 years and they would have gladly stayed and played - in which case he could have funded his social utopia and still had a revenue stream to fund it.  A classic example of getting your horse to go faster by beating it to death.

[we vs us]

Here's a fascinating report {warning: pdf} from the Center for Economic and Policy Research in Washington entitled "The Chavez Administration at 10 Years:  The Economy and Social Indicators.  Here's the executive summary:

 

quote:
The current economic expansion began when the government got control over the national oil company in the first quarter of 2003. Since then, real (inflation-adjusted) GDP has nearly doubled, growing by 94.7 percent in 5.25 years, or 13.5 percent annually.


Most of this growth has been in the non-oil sector of the economy, and the private sector
has grown faster than the public sector.


During the current economic expansion, the poverty rate has been cut by more than half,
from 54 percent of households in the first half of 2003 to 26 percent at the end of 2008.
Extreme poverty has fallen even more, by 72 percent. These poverty rates measure only cash
income, and does take into account increased access to health care or education.


Over the entire decade, the percentage of households in poverty has been reduced by 39
percent, and extreme poverty by more than half.


Inequality, as measured by the Gini index, has also fallen substantially. The index has fallen to 41 in 2008, from 48.1 in 2003 and 47 in 1999. This represents a large reduction in
inequality.


Real (inflation-adjusted) social spending per person more than tripled from 1998-2006.


From 1998-2006, infant mortality has fallen by more than one-third. The number of primary
care physicians in the public sector increased 12-fold from 1999-2007, providing health care
to millions of Venezuelans who previously did not have access.


There have been substantial gains in education, especially higher education, where grossenrollment rates more than doubled from 1999-2000 to 2007-2008.


The labor market also improved substantially over the last decade, with unemployment dropping from 11.3 percent to 7.8 percent. During the current expansion it has fallen by
more than half. Other labor market indicators also show substantial gains.


Over the past decade, the number of social security beneficiaries has more than doubled.


Over the decade, the government’s total public debt has fallen from 30.7 to 14.3 percent of GDP. The foreign public debt has fallen even more, from 25.6 to 9.8 percent of GDP.


Inflation is about where it was 10 years ago, ending the year at 31.4 percent. However it has been falling over the last half year (as measured by three-month averages) and is likely to continue declining this year in the face of strong deflationary pressures worldwide.

The big news is that Chavez has made some pretty amazing progress in solving some of the country's problems, not just used the money from the nationalized oil industry as crony bait. He's managed to increase the involvement of his government in the lives of the people but still, it seems, been able to encourage growth in the private sector. In other words: looky there! social programs that work!

Not to excuse Chavez for his bellicose rhetoric, but looks like his actual record is more mixed than one might think.

[cannon_fodder]

Wevus,

Chavez took over during an unprecedented oil boom (which is a full 80% of exports and 33% of the base economy - extrapolated it is well over 50%).  To his credit he spent much of that money on social programs that appear to have been effective, but ALL of the economic gains are directly related to the oil boom.  Was the Mayor of Tulsa responsible for our fantastic economy of the 1910-1925?  

Chavez made these gains by simply taking all the assets he wanted. The very assets that enabled the GDP to double and poverty rates to be halved.   Media, industry, oil infrastructure - he just took them.  In the short term that gave him a lot of capital to work with, in the long run it has seized his economic engine.

Couple with poor government management of the industries they took over and shortages caused by other policies (see food shortages) the lack of economic power could prove fatal to his ambitions.    If Oklahoma took over OneOK, Samson, Chesapeake, Phillips, OG&E, AEP, and all the media certainly we could install all the programs we wanted in the short term and make things fantastic.  In the long run, however, business in our State would grind to a halt and we would be worse the wear.

[we vs us]

quote:Originally posted by cannon_fodder

Wevus,

Chavez took over during an unprecedented oil boom (which is a full 80% of exports and 33% of the base economy - extrapolated it is well over 50%).  To his credit he spent much of that money on social programs that appear to have been effective, but ALL of the economic gains are directly related to the oil boom.  Was the Mayor of Tulsa responsible for our fantastic economy of the 1910-1925?  

Chavez made these gains by simply taking all the assets he wanted. The very assets that enabled the GDP to double and poverty rates to be halved.   Media, industry, oil infrastructure - he just took them.  In the short term that gave him a lot of capital to work with, in the long run it has seized his economic engine.

Couple with poor government management of the industries they took over and shortages caused by other policies (see food shortages) the lack of economic power could prove fatal to his ambitions.    If Oklahoma took over OneOK, Samson, Chesapeake, Phillips, OG&E, AEP, and all the media certainly we could install all the programs we wanted in the short term and make things fantastic.  In the long run, however, business in our State would grind to a halt and we would be worse the wear.

I'm definitely not claiming that he's managed the oil industry itself well, but I am saying that he's made measurable progress with the funds generated from the boom.  He has had a decade to do what most other central and south American dictators do, which is steal the bulk of the money and turn the nation into a banana republic.  Chavez -- and this is a surprise to me as it is to you -- seems to have actually done well for his people.  

Look at some of the things he's invested in, too.  Higher ed, a high growth rate for the portion of the private sector that isn't oil related . . . even slashing the general unemployment rate.  This is a lot of basic bread and butter stuff that will stand the country in good stead over time.  It looks (from here) like he's taking the money and diversifying, while laying some base for future growth.  That's a surprisingly smart move.

But who knows if it's sustainable or not?  He's up against not only a dip in oil prices but a worldwide recession, so a lot can happen in the next few years.  But he's in the catbird seat as far as the long term health of his economic engine.  He's got oil and -- at some point -- we'll need it.