The Falling Oil Prices in Venezuela

In: Business and Management

Submitted By xuanwen
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The Effects of Falling Oil Prices in Venezuela

Venezuela was founded in1845. It is a member of the Organization of the Petroleum Exporting Countries (OPEC) and located on the northern coast of South America. It is one of the largest crude-oil producers and exporters in the world. “Venezuela’s oil revenues account for about 95 percent of export earnings. The oil and gas sector is around 25 percent of gross domestic product.” (OPEC, 2015) Venezuela is also very famous for its petroleum industry. Except Petroleum, the country’s natural resources include natural gas, iron ore, gold, bauxite, diamonds and other minerals.
According to Shehryar (2015), “Since June 2014, a substantial decline in oil prices has occurred, bringing prices of oil down to a five-year low. Venezuela’s oil-dependent economy, without a competitive non-oil sector, has now been facing a tremendous challenge as the per-barrel prices hit a five-year low, with the situation expected to worsen by the first half of 2015.”
In this paper, I will introduce the trends of oil and exports in Venezuela and show the effects of the falling price on Venezuela.
Trends of Oil and Exports in Venezuela
Figure 1 displays the trend of the oil price in Venezuela. Pump price for oil in Venezuela was last measured at 0.02 US dollar per liter in 2012. It was declined from 0.14 US dollar per liter in 1999. The declining trend was huge between 1999 and 2004 and turned down to be smooth after 2008. (Trading Economics, n.d.) Figure 1
Figure 2 shows the trend of total exports in Venezuela. Oil accounts for 95 percent of total exports. Thus, this figure can also be regarded as oil exports as well. The biggest exporting partner is United States (40 percent of total exports), the second one is China (11 percent), and the third one is India (6 percent). The trend of oil exports is…...

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