Welcome to the socialist paradise of Venezuela where the massive oil revenues are channeled into feel-good social programs instead of infrastructure.
Wait -- people are driving less so oil isn't selling as well? Oh snap! From Yahoo News/Associated Press:
Venezuela behind on payments to oil contractors
Venezuela's state oil company is behind on billions in payments to private oil contractors from Oklahoma to Belarus, some of which have now stopped work, even as President Hugo Chavez funnels more oil revenue to social programs.
Petroleos de Venezuela SA, or PDVSA, says unpaid invoices jumped 39 percent in the first nine months of last year � reaching $7.86 billion in September. And that was when world oil was selling for $100 a barrel.
With prices plummeting by more than half, PDVSA is trying to renegotiate some contracts. But analysts say hardball tactics to reduce charges from crucial service providers could backfire by lowering Venezuela's oil output. And foreign debt markets are reflecting jitters about Venezuela's finances.
Oil accounts for 94 percent of Venezuela's exports and funds nearly half the socialist government's budget, and Chavez uses it to bankroll an international aid bonanza, showering allies with cheap fuel, refining projects and cash donations.
But U.S. contractor Helmerich & Payne Inc. said last week that it has stopped drilling with two of its 11 oil rigs in Venezuela because of delayed payments. The Tulsa, Oklahoma, company says it will stop three more rigs by the end of February and the rest by the end of July if PDVSA doesn't begin to pay off a debt it puts at nearly $100 million.
Dallas-based Ensco International Inc. said it suspended operations on an oil rig off Venezuela's Caribbean coast because it was owed $35 million, prompting PDVSA to take over operations.
And Belgazstroy of Belarus has stopped work on gas networks in western Venezuela because of nonpayment, Venezuela's ambassador to Belarus, Americo Diaz Nunez, told Russia's RIA-Novosti news agency, adding that two other Belarusian contracts are also in question.
Greg Priddy, a global oil analyst with the Eurasia Group in Washington, estimated that within a year, production could decline an extra 100,000 to 150,000 barrels a day if drilling slows � equal to $5 million of daily income even at today's slumping oil prices.
Chavez is an idiot. If he had backed off on the "social" programs and spent more on building up agriculture, transportation, resource extraction, serious education (Medicine/Engineering), high-tech, etc. he could have turned Venezuela into the crown jewel of South America.
Instead, he is squandering these funds on programs that do absolutely nothing to enhance the long term quality of life in his nation.
But of course, the useful idiots like Anthony Cristofani fall head over heels in love with incompetent kleptocrats like Chavez. Heaven help that they should have an unhindered view of what is happening. That would give them a case of cognitive dissonance. Just close your eyes and sing another verse of Kumbayah.
