Now that the 58-year-old dictator of Venezuela, Hugo Chavez, is gone, what impact will his death play in terms of the oil that Venezuela supplies to the United States? On CNBC on March 6, Michelle Caruso-Cabrera discussed the history and potential future situation.
Chavez was President of Venezuela for 14 years, and was important because Venezuela has some of the largest oil reserves in the world. When Chavez took over in 1999, Venezuela was producing 3.2 million barrels of oil per day. As time went on, Chavez began siphoning off the profits and not reinvesting in the state-run oil company. Production of oil declined to 2.8 million barrels per day.
Initially shipments from Venezuela accounted for nearly 18% of U.S. oil supplies, but as the years went by and Venzeula’s production slipped, that number dropped. Chavez also shipped oil to countries like Cuba and Bolivia, his political allies.
Currently Venezuelan oil account for only 8% of U. S. deliveries.
Will this situation change now that Chavez is dead? Will Chavez’s successor invest in his country’s oil industry and increase production? Only time will tell.
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