Making exorbitant promises during a political campaign is something Americans know all about. So is being strapped for cash so politicians have a difficult time following up on those promises. Welcome Hugo Chavez to the club. Gearing up his 2012 re-election bid, he has promised to build public housing complexes, increase social programs and revamp the public transportation system. But Chavez does not currently have the means to implement such plans. In order to raise money, Chavez is stake in Citgo Petroleum Corporation, the U.S. based oil company. Venezuela’s oil company, Petroleos de Venezuelza SA (PDVSA) bought 50% of the company in 1986 for nearly $300 million.
Citgo has been the main means of oil flow from Venezuela to the US. The US now exports around 32 million barrels from the Latin American country. But, Venezuela’s overall oil exports are decreasing; a statistic it blames on OPEC quotas. The US. Energy Information Administration estimates that the country produces about 2.2. million barrels a day, down 200,000 barrels from 2008.
In a statement he made in October, Chavez lamented, “Citgo is a bad business, and we haven’t been able to get out of it.” Chavez hopes to get about $10 billion out of the sale, although most agree the company will earn Venezuela far less. Still, for an estimated government budget of $47.5 billion dollars, any generated profit would greatly assist Chavez in his efforts.
Opponents argue that selling the American based company will endanger already strained ties with the United States, threatening long-term business interests, especially considering oil is the main revenue generator of the Venezuelan economy. In fact, the United States is one of the main supporters of the economy thanks to earnings from oil sales. But, Chavez is also considering politics and attempting to increase relations with other countries, including Iran, Russia, and China. “It’s hard for rational observers to understand that [Chavez] would take oil away from U.S. clients that pay cash for Venezuelan oil, in order to supply countries that consider Venezuelan oil almost as a right or as a political gift; however, Chavez is no longer driven by economics but by ideology,” said Gustavo Coronel, an energy consultant.