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Venezuelan oil strike continues unabated
by Will Refvem
Staff Writer
FILE PHOTO
Venezuelan President Hugo Chavez fired about 1,000 striking oil industry workers
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The Venezuela Central Bank decided to suspend Venezuela’s foreign exchange trading Tuesday in response to runaway inflation caused by a strike that has brought the country’s oil industry, and economy, to its knees.
The Bank’s decision is an attempt to curb inflation, which has risen to 30% in the 54 days since the strike began. On Tuesday the bolivar, Venezuela’s currency, dropped to an all-time low of 1,853 to the dollar. It has lost 25 percent of its value just this year and lost 46 percent in 2002. The Bank has gone through approximately $1.45 billion in foreign reserves trying to keep the currency afloat through the strike.
Beginning December 2, the conservative opposition to leftist president Hugo Chavez has spearheaded a strike among the oil industry’s 30-40,000 workers in an effort to oust the democratically elected president. So far Chavez has fired an estimated 1,000 workers.
Former US president Jimmy Carter, along with the “Friends of Venezuela,” a group comprising the US, Mexico, Brazil, Chile, Spain and Portugal that developed in the womb of the Organization of American States (OAS), has been trying to broker a deal between the two sides in an effort to remove the dead elephant from the economy’s back.
Carter announced two proposals for ending the standoff Tuesday. One involves amending the constitution to allow for early general elections and to cut a president’s term from six years to four. Amendments to Venezuela’s constitution require either a vote by the National Assembly or a referendum. Chavez has so far dug in his heels on a referendum, and his party holds a majority in Congress.
There are signs that Chavez, who survived a US-endorsed coup d’etat last April by rallying the nation’s poor, is nervous about consulting the public via a referendum. One estimate puts his popularity at a meager 25%, but that does not account for the poor of Venezuela’s urban shantytowns—a large group that appears to still support Chavez. His opposition is the upper and middle classes of Venezuela, who use the rank-and-file of the oil industry for muscle.
Petroleos de Venezuela (PDVSA), the state-owned oil monopoly, has been hit hard by the strike. Venezuela’s pre-strike output was an estimated 3 million barrels per day, and now even the government’s rose-colored glasses estimate puts it at 800,000 b/d, less than a third of previous output. More cleared-eyed estimates put the figure closer to 500,000 b/d. Even if a deal is reached, experts say it might take as long as three months for production to return to normal.
In addition to causing a financial crunch, the strike has also increased the number of accidents in the oil industry. Inexperienced workers filling in for strikers usually get the blame. A report in the Miami Herald called the oil business “dangerous and delicate” and cited several recent mishaps for illustration.
An estimated 4,500 barrels of oil have been spilt during the strike–and 4,000 of those were in one incident at a distribution plant in Carenero on January 14. On December 30, a Venezuelan tanker spilled 300 barrels into the ocean.
By far the most eventful day was January 7, when 300 barrels were spilled at Anaco (the government claims it was only 50) and two workers at the Palito refinery were seriously injured in an explosion. One is rumored to have died, but the company denies it.
The oil crisis in Venezuela comes at a time when fears of war with Iraq have already driven up world oil prices.
The Organization of Petroleum Exporting Countries (OPEC) has allowed other countries to increase output to prevent prices from soaring. Venezuela is OPEC’s fifth-largest oil producer.
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