Arguably an underdiscussed issue in the rise in the price of oil has been declining Venezuelan production (from c. 3.5m barrels a day to 1.75m). There is a great article ‘Hell of a Fiesta‘ in the latest New York Review of Books if you want a very readable account of how Venezuela got to this point. As always with these situations there is theft on an industrial scale, incompetence, idealology, political corruption, and just general stupidity:
Between 1999 and 2017 PDVSA earned $635 billion in cash and produced an additional $406 billion worth of oil, which it used to subsidize the internal market (gasoline in Venezuela is virtually free) and reward countries seen as politically sympathetic to the regime. What happened to the rest of this money? Jorge Giordani, a former minister of planning who left the government in 2014, estimates that $300 billion was simply stolen. Another portion was wasted on unfinished pharaonic projects (rail lines, bridges started but left incomplete), purchases of Russian military equipment, opaque and unaccountable multibillion-dollar public entities such as the Venezuelan Economic and Social Development Bank and the Fund for National Development, costly and unproductive expropriations, wasteful imports to compensate for the lack of internal production, purely sumptuary imports (500,000 automobiles in 2006 alone), and excessive growth in public employment. From 1998 to 2013, consumption grew by 60 percent but production barely increased.
Read the whole thing.