Sales price increases, production declines ??
Makes no sense, right? If your product is in demand and the open market price increases, you’d try to produce more.
Not in Venezuela. When you have a dictator who controls the markets (in the name of The People), the opposite happens. Even during the price run up of oil, production dropped by a fourth.
PDVSA, the state oil producer, has a bit of mission-creep.
“The new PDVSA is central to the social battle for the advance of our country,” said Rafael Ramirez, the company’s president and the minister for petroleum. “We have worked to convert PDVSA into a key element for the social battle.”
Operationally, what does this newspeak mean? Well, the oil company now makes furniture and household appliances. It is a food producer.
But the oil revenue must bring in enough cash to finance even a tinhorn socialists’ quest for total market domination. Well, central planning fails again. It seems that oil is not a commodity for sale, but as Mr. Ramirez said, a “key element for the social battle”.
That means it’s a party favor to be sold at a huge discount to everyone except the evil US. There isn’t enough money to upgrade or even maintain the means of production (good Marxist term). So the country can’t keep up the flow of its biggest export even when prices were at record levels. Sound like a downward spiral?
So for all of the drivel about evil capitalism exploiting the proletariat, the centrally-planned nationalized economies again show their inherent flaw. They just don’t work for production. Now if your mission is not efficient production but control of the populous, they’re just fine. Keeping everyone equally miserable is quite easy as long as you can focus their energies on blaming the US instead of the Dictator.
UPDATE: 10-23-2008. Now they can’t even keep up with domestic production of electricity. Central planning builds according to the plan, not what’s actually required.