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Venezuela Oil Industry Crisis Could  Undermine Chavez Government - 2002-04-06


Petroleum supply disruptions caused by labor and civic unrest in Venezuela are effecting the price of oil on the world market. Further strife is expected in the largest foreign supplier of oil to the United States.

Civic, political and business sector opponents of Venezuelan President Hugo Chavez are backing petroleum workers' unions in their protests. The workers say the president is meddling in the state-owned oil company by appointing directors who are politically aligned with his government. The oil company, Petroleos de Venezuela, has traditionally been run by professionals and had remained insulated from politics until now.

In recent days, thousands of oil workers have stayed home, engaged in work slowdowns or taken part in large anti-Chavez demonstrations. As a result, two out of five Venezuelan main export terminals have shut down and at least a dozen ships were left waiting at the ports with oil bound for the United States and other nations.

At least two people died in the recent unrest, and there is fear that opposition to the left-leaning Chavez government could lead to further violence in the days ahead.

All of this comes at a time when oil prices are on the rise because of violence in Israel and the Middle East. Oil industry analysts say a deepening of the crisis in Venezuela could have an even bigger impact on the world petroleum market than what is happening in the Middle East. Venezuela has the biggest oil reserves outside the Middle East.

President Chavez has shown no sign of backing down and has told oil workers and executives who do not like his decisions to look for work elsewhere. He says he changed management in February because the oil company had become "a state within a state." Mr. Chavez has also complained about generous benefits paid to some executives in a nation where half the population lives in poverty.

Oil revenues provide one-third of Venezuela's $110 billion gross domestic product and almost half of government's revenue. Political observers say a major disruption of the industry would create the biggest crisis yet for the controversial three-year-old Chavez government.

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