History of the Venezuelan Oil Industry

-Didn’t have gold so the spanish didn’t really care about it
-Had tons of oil seeping out of the ground, but nobody cared at first
-1908 Juan Vincente Gomez becomes president and grants several concessions to explore, produce, and refine oil to his closest friends, who then sell them to foreign oil companies
-1914 The foreign oil companies pretty quickly realize that there is a TON of oil in Venezuela. Caribbean Oil Company (which gets acquired later by Shell) is the first big one.
-Things develop slowly during WWI
-1922 The blowout of the Barroso No. 2 well in Cabimas really gets everyone’s attention
-1928 Venezuela becomes the world’s leading oil exporter, 2nd producer after US. Now Venezuela is someplace people actually care about
-By the end of the 1930s the Soviet Union overtook Venezuela in production, making it #3, but it was still #1 exporter
-In the 20s, agriculture was 1/3 of economy, by the 50s it was 1/10th. Got a serious case of Dutch Disease and most other industries collapsed.
-All of this pretty understandably created a deep distrust of the foreigners, some dude called them “The New Spaniards”
-From a 1927 novel: “The workers asked for a miserable salary increase and those blond, blue-eyed men who own millions of dollars, pounds and gulden in European and U.S. banks, refused.”

-1941 “Isaías Medina Angarita, a former army general from the Venezuelan Andes, was indirectly elected president.”
-1943 Angarita enacts the Hydrocarbons Law, which demanded 50% of oil profits for the government. Stayed in place until nationalization of the industry in 1976
-WWII ramps up the demand for oil, and Venezuela grants more concessions which leads to further development of new fields. They supplied the Allies

-Post-war oil demand continues to rise due to consumer automobiles,
-1950s Middle Eastern countries started exporting more, US institutes import quotas, world has an over-supply of oil, and prices plummet
-1960 Venezuela, Iran, Saudi Arabia, Iraq, and Kuwait start OPEC

1973 Oil Crisis
-1970s Persian Gulf oil exporters start pushing to get an ownership share of oil companies.
-By 1973 they had a 60% share (this is so vague, need to read that article up there for more info). Then they raise their prices 70% and embargoed countries friendly to Israel. This is great for Venezuela, between 72 and 74 government revenue from oil quadrupled
-Rest of the 70s president Carlos Andrés Pérez promises to use all that money to do awesome stuff
-But then in the 80s the price drops again because the OPEC countries were violating their quotas, and Venezuela ends up in a bunch of debt

-August 1971 president Rafael Caldera passes law nationalizing the country’s natural gas industry.
-Also in 1971 the law of reversion passed, says “all the assets, plant, and equipment belonging to concessionaires within or outside the concession areas would revert to the nation without compensation upon the expiration of the concession.” (quote from wiki, not necessarily the law)
-Decree 832 says all exploration, production, refining, and sales programs of the oil companies had to be approved in advance by the Ministry of Mines and Hydrocarbons.
-January 1 1976 oil industry officially nationalized under Carlos Andres Perez, creates Petróleos de Venezuela S.A., the national oil company.
-In 1980 PDVSA bought refineries in USA and Europe as the American Citgo, became 3rd largest oil company in the world.
-Between 1990-99, Venezuela’s industrial production declined from 50 percent to 24 percent of GDP, compared to decrease from 36 to 29 for rest of Latin America, even though production kept rising until 1998
-From 1976–1992, 29% of PDVSA’s income went towards the company’s costs, leaving 71 percent for the government. From 1993 to 2000, 64 percent of PDVSA’s income was kept by PDVSA, leaving 36 percent for the government

-1999 Chavez takes power. PDVSA kinda falls apart. Doesn’t bring any new fields onstream, and generally business kind of falls apart
-Chavez tries to reinvigorate OPEC and goes on a big tour and holds a big conference trying to get everyone to stick to their quotas again. Prices do go up, but this was probably because of the Iraq war and the rise of China
-2000 Chavez gets a huge boos in his authority from the national assembly, and he uses it to make a lot of changes to the oil industry. He enacted a new Hydrocarbons Law in 2002, but no info on what it did. Wikipedia says everyone was mad about everything he did though. One thing it says is he mandated 10% of PDVSA’s investment budget be spent on social programs.
-2002 there’s a strike by oil workers that leads to a big shutdown and subsequent price increase. Strikers wanted Chavez to resign. But they all get fired and replaced by loyalists. There were lots of protests against Chavez though, and there was even a coup attempt
-After the failure of the coup, combination of labor unions and business groups called for an “indefinite national strike” which, in many places, turned out to be a forced “bosses lock out” where the employees were prevented from working.[citation needed] When the strike ended, unemployment was up by 5 percent to over 20 percent in March 2003.
-2005 PDVSA opens first office in China and announced it would triple its fleet of tankers in the region. Chavez had been saying for a while that he wanted to sell more to China so he could be independent of the USA.
-2007 Chavez makes deal with Brazil to refine some oil there, and with Ecuador to refine some of Ecuador’s oil in Venezuela. Also a deal with Cuba to trade medical treatment for cheap oil
-State income from oil revenue grew “from 51% of total income in 2000 to 56% 2006”; oil exports increased “from 77% in 1997 to 89% in 2006”
-2012 “96% of the country’s exports and nearly half of its fiscal revenue” relied on oil production.

More real early economics

We’re starting with two imaginary people from an early section. Josh who has shoes but needs potatoes, Henry who has potatoes but needs shoes.
-If they were Iroquois, Henry would tell his wife he needs shoes, his wife would tell the other matrons, and if they approved he’d get some shoes from the community stockpile. To each according to his needs, basically
-If they were in a small, intimate community, Henry would tell Josh his shoes were nice, and Josh would give them to him. The potatoes wouldn’t enter in because both would assume that if Josh ever needed potatoes, Henry would give him some.
–One interesting little aside, particularly nice things thus get passed around a lot, since people compliment them and then are given them. But if you really want to keep something, you say it was a gift.
-Even in a fairly large, impersonal town, Henry’s wife would strategically mention he needs shoes, Josh’s wife would get him to give Henry the shoes, and then Henry owes Josh “one,” which Josh would call in when he needed/wanted something from Henry.

“In any of these scenarios, the problem of ‘double coincidence of wants’ so endlessly invoked in the economics textbooks, simply disappears. Henry might not have something Joshua wants right now. But if the two are neighbors, it’s obviously only a matter of time before he will.

This in turn means that the need to stockpile commonly acceptable items in the way that Smith suggested disappears as well. With it goes the need to develop currency. As with so many actual small communities, everyone simply keeps track of who owes what to whom.”

pg 34-36

Real Bartering

-Barter does exist, just rarely between fellow villagers
-Nambikwara of Brazil: if one band sees the cooking fires of another nearby, they’ll send emissaries to negotiate a trade meeting. If accepted, they hide the women and children and invite the men over to talk. Chiefs give a speech praising the other band and belittling his own, they put aside weapons, sing and dance, then individuals approach each other to trade. They have this really ritualized thing where they argue over if the things they want are any good, agree on a trade, and then with mock-force take the things they’ve agreed to trade. Then they have a big feast.
-So basically for the Nambikwara, “Barter… was carried out between people who might otherwise be enemies and hovered about an inch away from outright warfare– and, if the ethnographer is to be believed– if one side later decided they had been taken advantage of, it could very easily lead to actual wars.”
-Gunwinggu of Western Arnhem Land in Australia: They have a region-wide moiety system (kinship groups where everyone in a group is part of one lineage), so people are basically divided up into teams and can only marry people from other teams. They have a big festival called the dzamalag where after some initial negotiations, strangers come to another group’s main camp. They sing and dance, then do flirty dances, fuck, and give them trade goods. When everyone’s satisfied, the host group gives the visitors their own trade goods in return. Then everyone eats.
-Point is, barter happens during “meetings with strangers who will, likely as not, never meet again, and with whom one certainly will not enter into any ongoing relations. This is why a direct one-on-one exchange is appropriate: each side makes their trade and walks away.” It’s also why there are big rituals involving food and dance and “shared pleasures,” and why they make light of the tension of possible hostility between them through play.