Low Oil Prices are Crashing Venezuela’s Economy – courtesy of Stratfor

by Marilou Moursund on April 14, 2015

in Energy,Geopolitical

The fifty percent decline the price of oil has geopolitical implications in addition to hurting earnings.  From the linked Stratfor article on the impact of low oil prices on Venezuela:

The country relies on the import of basic goods to meet its needs, but those imports have been declining for the past two years. In January, the country imported an estimated $1.5 billion in food and other items, down from around $2.8 billion a year before. For a country that imports many of its basic food items, the drop portends significant consequences for the government. The administration is facing the prospect of massive protests around high food costs and scarcity. Anecdotal evidence indicates that lines at food stores have become more frequent and have become longer since December, causing popular discontent. Around 50 calls are made daily to emergency services in Lara state to report injuries in lines or fights between shoppers.

In addition, the long-running economic crisis could soon become an existential crisis for the ruling United Socialist Party of Venezuela. The rapid economic decline since last year’s drop in oil prices has clearly affected the government’s public approval. According to some polls, the upcoming legislative elections will be an unofficial referendum on President Nicolas Maduro’s rule. One poll by polling firm Datincorp concluded that nearly 50 percent of Venezuelans would vote for an opposition candidate at the time of the poll, compared with only around 30 percent for a United Socialist Party of Venezuela candidate. Polling in Venezuela tends to be polarized toward one political extreme or the other, but the trend in recent months shows a clear deterioration of political support for the government.

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