Wrong Turn Amigo

…But those ambitious plans to nationalize the oil-rich Orinoco projects could ultimately end up impeding investment and hindering production, according to the International Energy Agency (IEA).

At a congressional hearing on Wednesday, IEA chief economist Fatih Birol told reporters, “It may well be the case that Venezuela may have difficulties getting enough investment to increase the production capacity as much as the markets asks Venezuela to do. There may be limitations in terms of capacity due to lack of investments.”

And with that statement, the grand designs of Chavez’s socialist utopia were shown to be threadbare. Because while Chavez can strong-arm his own people into his socialist nightmare, he can’t force the world’s private enterprises to help him pump his precious oil without a profit. And without those profits, those fields will surely fall short of their projections.

The answer to this problem is abundantly clear.

It’s called the free market, and unlike its socialist counterpart, it works like a charm. It’s not to be feared, as Chavez claims, but embraced-especially if your goal is to maximize your oil production.

Energy & Capital