Oil in Venezuela: The Lesser of Two Evils

Oil, that ever prevalent word in the lexicon of global politics; that black gold that continues to fuel the capitalist vehicle as it gains speed and runs down everything in its path.  What happens then, when the largest source of remaining oil on earth is found deep in the heart of the self-declared enemy of unfettered capitalism? 

In October of 2009, a U.S. geological survey released a report estimating the amount of technically recoverable oil in the Orinoco belt of Venezuela at 513 billion barrels.(1)

This amount exceeds the most liberal estimates of recoverable oil in both Canada and Saudi Arabia, making it by far the largest source of hydrocarbons in the world.  Hugo Chavez, the President of Venezuela, has said that the amount of oil in Venezuela will allow the nation to continue extracting the resource for the next two hundred years.   This realization, along with the deepening socialist revolution ongoing for 11 years now, puts Venezuela and its allies in a unique and unprecedented position to fundamentally challenge the global system and to help raise Latin America out of its state of penury and subservience.

It is easy to see that the changes carried out thus far under the banner of the Bolivarian revolution in Venezuela have been quite progressive and certainly exceed the often symbolic gestures made by other left-leaning governments in the region.  Be that as it may, the path being taken by Hugo Chavez has not been radical, dictatorial, or communist as so many of his opponents and the mainstream media around the world try to depict.  On the contrary, everything Hugo Chavez has done so far has been in line with market principles and arguably far exceeds our own notions of democracy in Canada or the United States.  The oil reforms in Venezuela over the last decade are no exception.  Despite common misconceptions, Hugo Chavez did not nationalize the oil industry – that was actually done in 1973 with the creation of Petroleos de Venezuela (PDVSA), at a time when the oil industry was booming around the world.  The reforms carried out under Chavez have sought to eliminate inefficiencies and corruption within the PDVSA, and still include the private sector – but always as a minority partner.  The most important aspect of the energy reforms in Venezuela is that the right of the nation and of the people of Venezuela to benefit from oil has been enshrined in the constitution and in national hydrocarbon laws.(2)

Indeed, social spending has sky-rocketed since Chavez reigned in on the PDVSA, and the benefits of oil are reaching the masses of Venezuela and beyond.   In 2004 Venezuela invested 3.7 of its 6.5 billion net oil profits in social missions, and the plan from 2005-2012 has outlined spending of 10 billion per year.(3)  In 2007, PDVSA alone spent 14.4 billion on social programs.(4)  All of this social spending in Venezuela has meant drastic reductions in the levels of poverty and inequality, improved access to healthcare, huge improvements in education and the battle against illiteracy,(5) and subsidized food programs for the most vulnerable.  Although energy profits are being used in such important ways, the notion of profit itself has certainly lost some importance; profit and competition and those other divisive hallmarks of neo-liberal capitalism have been trumped by the notions of cooperation and solidarity, and it is this that truly separates the energy policy of Venezuela and the ideals of the Bolivarian revolution apart from traditional capitalist principles and the practices of the North.  Through programs like PetroCaribe and PetroAmerica, Venezuela has been providing subsidized oil to some of the region’s poorest nations.(6)  Fair trade deals have seen Venezuela trade oil for much needed doctors from Cuba, or oil for food and goods with Argentina, Brazil, and Uruguay.(7) 

The utilization of a natural resource for the benefit of those people who are affected by its exploitation does not seem like such a far-fetched scenario, yet it has taken huge strides and tremendous efforts from the people of Venezuela to realize this dream.  The people of Venezuela have had to mobilize first to overcome a coup d’etat attempt in 2002 carried out by the economic elites and backed by the U.S, and then an oil industry lockout in 2003 carried out by disgruntled managers within PDVSA which temporarily crippled the economy.    

It is no coincidence that the U.S. and Canada have been upping their vilification of Venezuela over the last few years, perhaps paving the way towards a justification for yet another foreign intervention in the global south.  Venezuela is no military threat, especially with a U.S. funded and militarily occupied Columbia right next door.  Rather, Venezuela is a moral and ideological threat, obstinately checking U.S. and Canadian imperial ambitions and setting an example of the good that can be done with oil money.  Canada has continually attempted to label Venezuela as undemocratic and unstable, and by doing so has tried to perpetuate the notion that Venezuela is an unsafe and unethical place for foreign companies to invest.  By labelling Venezuela as such, Canada is able to justify its own profit driven-privatized oil industry that gives little back in terms of money or oil to Canadians, that displaces indigenous communities, and that is one of the most environmentally destructive operations in the world. 

The irony of both Canada’s and the United State’s continuous attack on Venezuela is that they remain dependent on the important oil producing nation.  Despite Canada’s vast reserves of oil currently being exploited, very little of it actually remains in Canada, and in 2008 Canada imported $1.3 billion in crude oil from Venezuela.(8)  The U.S. is in no better of a position, as it still receives some 1.5 million barrels of crude oil and refined petroleum products daily from Venezuela.(9)  In fact, Venezuela has been providing low cost heating oil to vulnerable communities in the United States since 2006 through CITGO Petroleum, a subsidiary of PDVSA.(10)

We have always drawn parallels between oil and capitalism and the plunder of the earth, but Venezuela has shown that despite all of the negative effects that oil has on this world, some good can be done.  It is a paradoxical position indeed for a revolution to move forward on the principles of equality, justice, liberty, and social and environmental consciousness, while at the same time being fuelled by oil.  All that can be hoped for is that an example may be set for those other nations producing oil, that the resource may be used for the advancement of society and the progress of humankind rather than for the enlargement of fortunes and the escalation of consumption.  That we have come to rely on oil to make the world system function is an evil in itself, but having accepted the inevitability of oil remaining relevant into the future, the people of the rich world ought to look south for an example of what can and should be done with it.

Notes:

(1)    “An Estimate of Recoverable Heavy Oil Resources of the Orinoco Oil Belt, Venezuela.”  United States Geological Survey. Oct. 2009. Web. <http://pubs.usgs.gov/fs/2009/3028/pdf/FS09-3028.pdf>.

(2)    Wilpert, Gregory. “The Economics, Culture, and Politics of Oil in Venezuela.” Venezuela Analysis. 30 Aug. 2003. Web. .

(3)    Gindin, Jonah. “Venezuelas and Canada’s very different approaches to oil.” Venezuela Analysis. 14 Dec. 20006. Web. <http://www.venezuelanalysis.com/analysis/2138>.

(4)    Alvarez, Cesar J., and Stephanie Hanson. “Venezuela’s Oil Based Economy.” Council on Foreign Relations. 09 Feb. 2009. Web. .

(5)    Weisbrot, Mark., Rebecca Ray, and Luis Sandoval. “The Chavez Administration at Ten Years: The Economy and Social Indicators.”  Centre for Economic Policy and Research. Feb. 2009.

(6)    Alvarez, Bernardo. “PDVSA’s Vision for Social Development.” Energy Tribune. 17 Sep. 2007. Web.        <http://www.energytribune.com/articles.cfm?aid=619>.

(7)    Gindin, Jonah. “Venezuelas and Canada’s very different approaches to oil.” Venezuela Analysis. 14 Dec. 20006. Web. <http://www.venezuelanalysis.com/analysis/2138>.

(8)    Fenton, Anthony. “The revolution will not be destabilized.” The Dominion. 03 Apr. 2009. Web. <http://www.dominionpaper.ca/articles/2557>.

(9)    Alvarez, Cesar J., and Stephanie Hanson. “Venezuela’s Oil Based Economy.” Council on Foreign Relations. 09 Feb. 2009. Web. .

(10)“Venezuela’s CITGO, Maine Gov. and Tribes Sign Low-Cost Heating Oil Deal.” Venezuela Analysis. 12 Jan. 2006. Web. <http://www.venezuelanalysis.com/news/1565>.