What sand is to the Sahara, petroleum is to Venezuela. Venezuela has the largest oil reserves in the world. More than Saudi Arabia. It has proved reserves of 297 billion barrels.
But now Venezuela, an oil exporter for almost a century, can't even meet its domestic oil needs.
Venezuela has begun importing oil.
Venezuela, the country with even more oil than Saudi Arabia, has begun importing oil.
It's a familiar story. Like most states, Venezuela is a stranger to fiscal and monetary prudence. It has failed to make the necessary capital investments in its oil industry. Venezuela, having nationalized the industry and seized the assets of joint venture partners like ExxonMobil and Conoco, now finds that others are unwilling to risk investing in production deals there.
So Venezuela has to import oil now from places like Algeria and Russia. The money to pay them for oil to make an exportable crude blend will soon run out, too. Then gasoline will join the list of Venezuela's other shortages like soap and shampoo, rice and milk, coffee and sugar, and even toilet paper.
I write occasionally about events in places like Venezuela and Argentina because they are like laboratory experiments in crazy policies and crackpot economic theories.
Despite the consequences there for all to see, we are busily implementing variations of the same policies here.
What does it mean to "put government in charge" of desert sand or of oil? It means central economic planning by boards and bureaucrats. It means price interference and controls by politicians. It means cronyism.
Just like putting government in charge of American health care.
Putting the government in charge means that production or supplies go down. And costs go up.
Investor's Business Daily reported that in revamping Obamacare's notoriously expensive website, healthcare.gov, two weeks ago, the administration chose to withhold premium prices from the site until a week after the elections!
Now does that sound like the most transparent administration in history to you?