Energy is a fundamental resource due to the critical roles that it plays in running industrial operations and private undertakings. Oil accounts for a huge percentage of the world’s energy requirements, and it is availed by different petroleum-producing countries in different continents. Venezuela is one of the countries endowed with large oil reserves. Venezuela is ranked as the 12th nation worldwide in terms of the number of oil barrels produced per day. However, despite this fact, Venezuela is currently importing oil. This paper describes Venezuela and its oil situation.
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Description of Venezuela
Venezuela is one of the federal republic states situated along the southern coast of South America. It borders Brazil to the south, Guyana to the East, and Brazil to the South. Venezuela consists of 23 states that are composed of the Capital District and the federal dependencies, which cover the offshore islands. Venezuela is rated as one of the most urbanized states located in Latin America with a majority of its population living in large cities like Caracas.
Venezuela’s oil situation
Venezuela has one of the world’s biggest oil reserves. Previously, it was involved in oil exportation. However, the claim propagated by the state’s late president, Hugo Chaves, of reclaiming the control of the Venezuelan oil industry by initiating a joint venture with ExxonMobil and Conoco companies is ironical because the county is incapable of pumping adequate oil from its reserves to meet both commercial and domestic needs. Chavez was alleged to revolutionize the Petroleous de Venezuela SA (PDVSA) oil company by using it to hook him and his supporters in power (Wilson par. 6).
Chaves converted the oil company to a source of income through coerced funding of corruption-oriented social programs. He utilized the company’s revenue to cater for the political campaign expenses of his successor, Nicholas Maduno. Additionally, the huge subsidization of oil prices by the company and the drastic fall in the global oil prices affected the country negatively thus prompting the decision of oil importation from Algeria and Russia.
The Venezuela’s oil companies lacked requisite equipment like upgraders required to make crude oil transportable and ready for the refinery. This scenario emerged from inadequate funding to build upgraders because investors were unwilling to invest in the county. The level of oil production declined due to the state’s poor investment and bad policies. The sequence of fires and explosions in the oil refineries further lowered oil productivity, thus necessitating oil importation to meet local demand.
How Venezuela’s oil situation is related to the book, Strong Societies and Weak States
The book highlights why some third world rulers often have sufficient resources at their disposal yet they encounter complications in mainstreaming state organization to implement social policies successfully. Consequently, the rulers are never successful in getting their citizens what they require because the distribution of revenue and services is contrary to the stipulated policies (Migdal 263). Similarly, in Venezuela, Chaves redirected revenue from the national oil company to grant-riddled social programs, which resulted in insufficient oil production despite the country possessing large oil reserves.
State institutions create an eminent presence to every segment of the society including those residing in remote rural areas. On the contrary, it is evident that the performance of the state agencies is under regulations, which are dissimilar from the visions of the founders and initiators of the company. The state oil company of Venezuela supported this argument as its revenues were used for different purposes from those stipulated by its founders.
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State resources should be used to achieve a common good for the citizens and future generations. However, some countries suffer from insufficiency of good and services despite being endowed with huge deposits of such resources. State rulers are obligated to foster appropriate governance and proper utilization of resources to ensure the satisfaction of societal needs and avoid unnecessary shortages.
Migdal, Joel. Strong Societies and Weak States, Chichester: Princeton University Press, 1988. Print.
Wilson, Peter. “Venezuela, with world’s largest reserves, imports oil.” USA Today. 2014. Web.