Staring At The Ceiling

 We’ll get to our Venezuela : Down The Rabbit Hole segment in a sec but first…Argus Media had this headline, “Venezuela Oil Exports May Hit Ceiling Quickly”. Kinda’ self-explanatory huh? Nobody that’s really been paying attention should be surprised by this. We’ve cited various oil analysts over the last year or two that put PDVSA’s (Venezuela government-owned oil company) maximum production capacity, without a massive foreign investment, at approximately 850,000 bpd (barrels per day). I know, the Maduro regime keeps telling us that the Iranians will rebuild their crumbling infrastructure, and that’s all well and good, but the analysts have also told us that it will take about $10 billion a year for ten years to accomplish this. So, where are we now?

 Chevron aimed to export 50% more crude from Venezuela in February than in January. Plans to ship 4 million barrels/month or 140,000 bpd may be near the ceiling for what is possible in Venezuela due to logistical constraints. Only 1 million barrels were completed loading as of February 24th for the month compared to 2 million in January, according to ship tracking data from Vortexa (ship tracking is the only reliable data as PDVSA numbers are always inflated).

 Chevron has increased production from it’s 4 joint ventures  to about 110,000 bpd (up from about 29,000 bpd before the sanctions-easing) and is aiming for 200,000 bpd this year. (Skeptics might wonder how they’ll do that when they’ve already said they won’t increase investment in Venezuela for at least 6 months)

 Venezuela has been slowly increasing production this year to almost 700,000 bpd (up from between 615,000 – 625,000 bpd last year) but some Venezuela oil observers say output has hit a ceiling citing the need for dredging at Lake Maracaibo (no small task), damaged or destroyed equipment after years (decades?) of neglect, aging pipelines, and port infrastructure. “I do not believe we will exceed 900,000 bpd, not even with the help of Chevron.” says oil economist, Rafael Quiroz.

 Venezuela President (Dictator), Nicolas Maduro, has set a production goal of 2 million bpd this year. Then again, that was his prediction for 2022 and they achieved less than a third of that. This is not surprising as every year for 8 straight years he predicted that the coming year would produce the “Bolivarian Economic Miracle” and for 8 straight years the economy contracted.

 I don’t know how many different ways we can say it. There is no prosperity for Venezuela, no future for Venezuela, until Nicolas Maduro and the Chavistas are gone from power.

 Now, let’s head Down The Rabbit Hole…

 Chapter 18/ It’s A Wrap…

 “There are only four things…what people want to hear…what they’re willing to believe…everything else…and then there’s the truth.” – The International

 I wanted to begin our wrap-up session with that quote from “The International” because I think of it all the time. If you haven’t figured it out yet, I am, if nothing else, a cynic and that quote is perfect for me. It’s a constant reminder not to “drink the Kool-Aid”.

 In my (not so humble) opinion, we tend to get into trouble when ideology trumps, no pun intended, reality. Everything and everyone should be evaluated on it’s own, or his or her own merits, not grouped together. Everything and everyone are not always as they appear to be. I find that I’m usually better served when I slow down, stop and think, look beneath the surface, peel back the layers of the onion, all that good stuff. If I take the time, am willing to ask the questions, and honestly evaluate the answers (those based on facts) I at least have a chance to reach some kind of understanding. I may still get it wrong but at least I have a chance.

 So why am I saying this? If you haven’t guessed already, I’m not a big fan of socialism. It seems to go against both human nature and what I learned from my parents and grandparents, specifically another good old saying, “There is no free lunch”. I think of socialism as “Wouldn’t it be great if…?…”. The USA got an early look at socialism/communism with the Pilgrims. When they arrived in the New World they took a communal approach to planting, tending the crops, and harvesting. It would have been great if (There it is again…”Wouldn’t it be great if…? …”) everyone had the same sense of responsibility. It would have been great if everyone was equally motivated and had the same work ethic. They almost didn’t survive “wouldn’t it be great if…?” and did so only through the magnanimous treatment by the indigenous people. The following season they went the private property, personal responsibility route and they prospered.

 While I could go on and on about the failures of socialism there’s plenty of good, well-researched, work out there regarding the consequences of socialist policies. My goal was (is) to try to understand what happened in Venezuela through a lot of hard work, research, and personal experience. I believe I accomplished my goal (although I’ll still keep working on it) and have a much better understanding of what happened than I did before I started this project (and before I lived in Venezuela).

 One theme that seemed to surface time and again was good intentions (at least vocally) gone bad. What they proposed always sounded good, generally started out well, and ended badly. The reason for this repeated pattern, they ran out of money. (I know it gets a bad rap but it really is all about the money) Free healthcare sounds great! Who isn’t in favor of that? With one caveat…the one nobody wants to talk about…how will it be paid for? When I hear “there’s plenty of money” (without details) or “we’ll figure it out” I’m reminded of Nancy Pelosi’s famous statement regarding the “Affordable Care Act” (which tripled my healthcare premiums, by the way), “We have to pass it to find out what’s in it.” Then it turns out that what’s in it isn’t exactly what we were told was in it but it’s too late. Don’t give me platitudes and generalizations, I want details. How does it work…exactly, and who…exactly is picking up the tab? There is no free lunch!

 More tomorrow….

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