Chavez Policies Turn Venezuela Oil Tap

President Hugo Chavez has won friends at home and abroad with his generous spending on social programs ranging from support for Venezuela’s single mothers to shipments of cheap heating oil to poor Americans from Massachusetts to Alaska.

But Chavez’s cash cow, Venezuela’s state oil company, can’t keep paying the price forever. The long-term capacity of the U.S.’s No. 4 oil supplier to keep pumping crude is under threat because it is spending more on Chavez’s ideological agenda than on badly needed investments, industry analysts say.
Petroleos de Venezuela SA, or PDVSA, “is overstretched to capacity with any number of needs,” said Patrick Esteruelas, an analyst at the New York-based Eurasia Group. “It simply can’t cope at this stage.”

The company is borrowing billions from international lenders, while independent estimates show its output falling. U.S. government data shows imports from Venezuela last year hit a 12-year low after dropping 8.2 percent from 2005.

Houston Chronicle