File this one under "biting the hand that feeds you."
It seems that Hugo Chavez, the communist dictator of Venezuela, is in the process of ruining his nation's sole source of substantial income -- its oil industry.
Bottom line: Chavez replaced experienced engineers, directors, and managers with cronies who know little about oil production or the business of oil trading. The result has been a marked increase in the number of spills, fires, and other accidents which have turned Venezuelan oil into a very unreliable commodity. And the Chavistas have taken control of the state-run oil company, PDVSA, turning part of its corporate office space into a luxury university that currently provides 5,000 students with a completely free education; the university's expenses are paid by money taken directly from PDVSA's revenues.
Perhaps Chavez knows he is in trouble, which could explain why he has convinced China to buy a lot of oil from him, and why he is working with Russia and Iran to form an oil cartel that could displace OPEC as the primary agency in control of the world's oil prices.
Glenn Reynolds points out the obvious conclusion:
The only thing saving Chavez from himself is steadily rising oil prices; if they reverse, it's a good bet that the Venezuelan government will fall, doing serious damage to the resurgant left-wing populist strain of Latin American politics. I'm told that PDVSA used to be known as the only state-run oil company that was competitive with the majors in terms of expertise and efficiency; now it is rapidly descending past other state-run firms in terms of competence. Since Venezuela's oil is unusually heavy, sulphurous, and difficult to extract, that decline will be a disaster for Venezuela's poor, who may be enjoying those marble elevators without electricity to run them if oil falls back towards $25 a barrel. This is not some grim gloating of a classically liberal economics writer at having been proven right. If PDVSA screws up the Venezuelan oil supply, consumers around the world will suffer, the poorest worst--and the poorest Venezuelans worst of all.