• 8 minutes U.S. Shale Oil Debt: Deep the Denial
  • 13 minutes WTI @ $75.75, headed for $64 - 67
  • 16 minutes Trump vs. MbS
  • 2 hours Despite pressure about Khashoggi's Murder: Saudi Arabia Reassures On Oil Supply, Says Will Meet Demand
  • 21 mins Dyson Will Build Its Electric Cars in Singapore
  • 10 mins China Opens Longest Mega-Bridge Linking Hong Kong to Mainland
  • 12 hours Knoema: Crude Oil Price Forecast: 2018, 2019 and Long Term to 2030
  • 16 hours Iraq war and Possible Lies
  • 2 hours Can “Renewables” Dent the World’s need for Electricity?
  • 3 hours Satellite Moons to Replace Streetlamps?!
  • 13 hours Get on Those Bicycles to Save the World
  • 14 hours EU to Splash Billions on Battery Factories
  • 3 hours Aramco to Become Major Player in LNG?
  • 54 mins How Long Until We Have Working Nuclear Fusion Reactor?
  • 4 mins The Balkans Are Coming Apart at the Seams Again
  • 4 hours Why I Think Natural Gas is the Logical Future of Energy
Alt Text

Why Crypto Miners Are Paying Attention To The Permian

The Permian is literally burning…

Alt Text

Oil Market Loses Its Bullish Edge

Bullish sentiment has dominated oil…

Alt Text

China Turns Its Back On U.S. Oil

As the ongoing trade war…

Joe Weisenthal

Joe Weisenthal

Joe is a writer for Business Insider.

More Info

Trending Discussions

Despite High Oil Prices Venezuela Falling Further into Debt

Petro-dictatorships typically boom and bust with the price of oil, so you'd think that Venezuela would be riding high right now.

But a new report from Morgan Stanley presents a picture of a country that's actually falling further and further into debt, while running low on hard dollars.

The firm doesn't see an imminent credit "event" but it's not good.

There seem to be two main explanations for the apparent shortage of hard currency. One version – put forward by the authorities – is that Venezuela is embarking on a significant upgrade of its oil complex and needs major investment, especially in developing the Orinoco belt fields. However, there has been a conspicuous absence of news of major new oil investment on the ground from either official sources or the private companies operating in Venezuela. Most news accounts have focused on announcements of planned investments or signing ceremonies. Indeed, inward foreign direct investment that would be necessary to develop the Orinoco belt does not appear to have materialised. Instead, FDI has seen almost uninterrupted outflows since 3Q08 (see Exhibit 3).

Venezuela: Inward FDI
Image: Morgan Stanley: Paolo Batori

So if oil investment spending isn't the problem, what it?

Basically, bad economic polices:

There is an alternative explanation for why Venezuela appears to be short of hard currency cash: policy heterodoxy has hurt domestic supply, forcing an increase in imports as a substitute. Policy heterodoxy – especially the expropriations, lack of property rights and rising participation of the state in the production and distribution process – have led to a structural decline in Venezuelan production capacity, forcing a greater dependence on imports to satisfy demand. In turn, Venezuela’s reliance on imports means that it must generate enough dollars to finance those imports. Indeed, we suspect that the fundamental trade-off faced by Venezuelan policy-makers appears to be between economic growth and the health of external accounts.

By. Joe Weisenthal




Back to homepage

Trending Discussions


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News