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Of all the OPEC members, Venezuela may be the one suffering most from the precipitous drop in oil prices over the last five months. Although Caracas claims to be producing 3.1 million b/d, nearly all outside observers put the number at 2.3. Then there is increasing domestic consumption in a country where the number of cars has increased from 2.6 to 4 million in the last six years.

President Chavez is exporting 400,000 b/d at less than market rates to various friendly countries around Latin America and the world. After all the subtractions, it appears that Venezuela only exports somewhere around 1.4 million b/d that earns hard foreign currency. As Venezuelan oil is currently selling for $46 a barrel, the country’s oil exports earnings could be on the order of $25 billion a year – well below what is needed to run the government and support imports.

Caracas claims to have large reserves of foreign currency, but many observers believe that if oil prices do not start increasing soon, Chavez will have to make some major policy changes within the next year.