The collapse of the Venezuelan oil industry

Venezuela, once one of the richest countries in Latin America, is now on the verge of bankruptcy as the country lacks necessities such as food, water, and medicine. Historically, Venezuela’s oil industry provided its citizens with a strong economy, but now Venezuelans are suffering as the industry declines. Venezuelan citizens are forming protests that are leading to violence and numerous deaths, according to
Mr. Nicolás Maduro, the current President of Venezuela, is serving his first term after being elected in 2013. Before Mr. Maduro took office, President Hugo Rafael Chávez Frías led Venezuela for 14 years. He held office from 1999 until his death in 2013.

Venezuelan protesters held back by the Venezuelan police force.
Courtesy of The New York Times 

Under Mr. Maduro’s leadership, food shortages and high prices for basic necessities are devastating the country and causing widespread social unrest. Mr. Maduro recently increased the minimum wage but, despite this increase, prices for basic goods such as food and medicine are still unaffordable. As tensions worsen, Venezuelans are displaying their frustration through protests. In response, Venezuelan security forces use violence in an effort to instill fear and stop these protests, according to CNN

Venezuela is best known for its robust oil industry, but recently the market has declined significantly. In 2013, under Mr. Chavez’s leadership, Venezuela earned $80 billion in oil. Then, during Mr. Maduro’s presidency, the oil prices dropped a staggering 50 percent from 2014 to 2015. By 2016, the country earned only $20 billion. 
The oil industry’s income provides foreign currency to the Venezuelan government, allowing it to distribute that money through currency exchange markets. Venezuela is dependent on its oil industry, so as oil prices drop, its economy declines as well. This year, Venezuela’s oil prices are the lowest they have been in 20 years, according to

The decline of the Venezuelan oil industry prices.
Courtesy of CNN

As the situation in Venezuela worsens, it is uncertain if Venezuela will be able to recover from its oil crisis. Upper School History Teacher and Chair of the History Department Mr. Vincent Badagliacca provided insight on Venezuela’s changing environment.  

Before the drop in oil prices, Venezuela, a country with access to more oil than Saudi Arabia, was riding high. However, the government failed to improve their oil production in volume or efficiency. They failed to plan ahead,” Mr. Badagliacca said. “When oil prices fell, Venezuela was unable to adapt and compete. Consequently, the bottom has fallen out of the oil industry in their country.”

The decline of the oil industry has depleted resources, causing daily prices to soar. For example, some Venezuelans are now unable to afford basic items such as bags of rice. For instance, a 5-pound bag of rice from a local grocery store in the United States costs approximately $3. However, a bag of rice at a local grocery store in Venezuela now costs 8,000 bolivars, which is roughly equivalent to $49. Other basic grocery items such as beans, milk, eggs, and fruit cost almost four times the amount of the monthly minimum wage, according to CNN. These prices are neither affordable nor sustainable, and the decline of the oil industry is causing poverty and deprivation in Venezuela. 

A local store in Venezuela completely bare due to food loss. Courtesy of The New York Times

Because Venezuela is experiencing these extreme food shortages, the government is now persuading its citizens to begin using rabbits as a food source. The Venezuelan government is desperate to reduce the severity of food shortages, according to CNN. 

The rapid decline of the once prosperous Venezuelan oil industry is resulting in harsh living conditions for the citizens of Venezuela. As the nation’s lucrative oil industry continues to plummet, Venezuelans are experiencing a weakened economy and are continuing to protest.
– Christine Guido, Staff Writer