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Blame Chavez

Posted by Richard on May 16, 2006

BizzyBlog observed that Venezuelan oil production has dropped 45% under the progressive leadership of Hugo Chavez, and noted that this supply decline is probably a significant factor in recent oil price increases:

Since oil is an inelastic product (meaning that, for example, a 10% price hike leads to less than a 10% reduction in demand, in oil’s case a lot less than 10%), shortfalls in Venezuelan production have directly contributed to at least a portion of the worldwide runup in oil prices.

Why is this happening? That’s simple and so predictable — Chavez has abandoned capitalism. He had the state-run oil company fire half its workers after a two-month 2003 strike. Yet he expects the oil production infrastructure to run itself after placing less competent cronies in key positions and spending money that should be put into infrastructure investment into “social programs.”

Don’t hold your breath waiting for the 60 Minutes or Dateline story revealing how socialism is to blame for $3 gas.

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