Why Venezuela Is So Poor Despite Having So Much Oil

Venezuela has the largest reserves of oil in the entire world more than Saudi Arabia Iran Iraq and even much larger oil-rich countries such as the United States Canada and Mexico despite this Venezuela does not have a strong economy in fact Venezuelans today are markedly worse than they were 20 years ago so why is Venezuela so poor if it has access to so much money generating oil [Music] hello and welcome to geography by Jeff Venezuela is a fascinating place while the country began its life as a colony it would eventually go on to become the first independent nation in South America however the discovery of vast amounts of oil has seen it devolve into an authoritarian petrostate in recent decades which has ended in the country becoming incredibly poor today and as with all of my videos there's a geographic reason for this but first if you're a fan of my videos consider supporting me over on sub stack paid subscribers get access to even more geography every week special callouts ad-free podcasts and these extra special perks so if you want to support my work and get access to all of these extra bonuses substack is the place I'll see you there thank you [Music] like with most countries today Venezuela has its fair share of colonial history but before we get to how the country was shaped by European powers it's worth highlighting that Venezuela was home to many indigenous civilizations including the Tomato cuica culture this Society was very complex and had pre-planned permanent Villages surrounded by irrigated terraced fields and many other features that would be common in Europe at the time as well but while Venezuela was home to an estimated 1 million indigenous peoples the arrival of Europeans would upend their lives completely Christopher Columbus first landed in what is now known as Venezuela during his third voyage to the new world in 1498. however it wasn't until the early 1500s that Spain established their first permanent settlement in South America in the present-day city of kumanya this marked the beginning of the Spanish colonization of the region with the Spanish Crown seeking to expand its Empire and secure its claims to the new world against other European powers and as Spain expanded throughout the continent they would impose their institutions culture and religion on the native populations this would include an economic system known as the encomienda whereby the crown granted settlers a number of indigenous people from whom they could demand labor or tribute as the colony of Venezuela expanded over the centuries Spain would continue to establish new cities and territories initially the Region's economy was based on Pearl fishing but later it expanded to include agriculture livestock and Mining but as Spain continued to exploit its Venezuelan Colony its people would start to think about what life might look like as an independent country the first Rumblings of Independence within Venezuela began in the late 1700s influenced by Enlightenment ideas of Freedom equality and self-governance along with examples set by the American and French revolutions the colonists started to question Spanish rule this content was fueled further by heavy Taxation and strict trade restrictions imposed by the Spanish crown on July 5th 1811 a Congress of Venezuelan provinces adopted the Venezuelan Declaration of Independence this marked the formal beginning of the struggle for a free Venezuela Simon Bolivar often called el Liber emerged as a key figure in the fight for independence initially he faced several defeats and was forced into Exile multiple times however his resilience led to the formation of the army known as the Patriots with bolivar's leadership Venezuela would eventually win its war for independence in 1823 following the war bolivar's Vision led to the creation of a federation known as Grand Colombia comprising present-day Colombia Venezuela Ecuador and Panama however the Federation was short-lived due to internal divisions and political disagreements and Venezuela was secede from Grand Colombia in 1830 cementing its status as a fully independent nation like with many of Spain's colonies Venezuela would wage a long protracted war for independence but while Independence was a defining moment for the South American country it would be the discovery of vast amounts of oil that would shape the Venezuela we know today but before we get to how oil would change Venezuela if you're enjoying this video hit that subscribe button more fun geography videos are just a single click away foreign [Music] has been a huge economic resource Boon for many countries over the last century or so countries in the Middle East such as Saudi Arabia Kuwait Iraq and Iran were able to basically fund their entire National budgets on the back of the vast amounts of oil they were able to pump out of the planet and because these countries controlled so much oil they were also able to create an organization called OPEC to control and influence oil prices around the world but while OPEC member states would primarily be based in the Middle East one of the founding members was all the way in South America and that country is Venezuela Venezuela would first discover oil in Lake Maracaibo on its far Northeast Coast in the early 1900s but it would take a few decades until the nation would emerge as a significant player in the global oil industry by the 1930s Venezuela would become one of the largest oil exporters in the world with the highest per capita gross domestic product in Latin America much of this is due to the oil and significant investment the resource brought from foreign oil company but the influence of foreign companies in Venezuela's oil industry generated backlash over time leading to the nationalization of the oil industry in 1976. after seizing control of the country's oil the government would establish petroles to Venezuela a state-owned company responsible for the exploration production refining and exporting of oil in an effort to maximize its profit from the oil industry and for a while it seemed like Venezuela was going to become one of the wealthiest countries in the world the oil boom of the 1970s triggered by a surge in global oil prices due to geopolitical events such as the arab-israeli war and the Iranian Revolution would bring even more money to Venezuela and with oil revenues filling government coffers it would lead to a period of significant economic growth for the country The increased oil Revenue enabled the government to fund ambitious development projects expand public services and Implement extensive social programs it was during this time that there was a marked increase in living standards a burching middle class and an urban migration trend at this moment in time Venezuela was one of the wealthiest countries in South America unfortunately for Venezuela their oil fortunes would not last for long as a series of global geopolitical events and continued infighting corruption and mismanagement would eventually empty the country's Collective pockets thank you in 1973 Venezuela was producing and exporting 3.5 million barrels of oil per day but by 2020 that amount had dropped to a little less than 600 000 barrels per day this is despite the fact that Venezuela has the largest proven reserves of oil of any country on the planet with 304 billion barrels put this number in perspective if Venezuela went back to pumping 3.5 million barrels per day it would take over 237 years for the country to run out of oil and while the foundation of Venezuela's wealth was based on its huge oil reserves this would unfortunately lead the country to an over-reliance on oil as a source of income this created within Venezuela a commonly known economic Effect called Dutch disease where in an upsurge of a singular resource leads to a strengthening of the local economy but also makes other industry sectors less competitive in Venezuela the oil sector flourished but others like Agriculture and Manufacturing suffered leading to an economy that was excessively dependent on oil and it was this lack of diversification an economy that exposed Venezuela when oil prices plummeted in the 1980s and again in the 2010s causing an economy that was very unstable it was this economic and social downward spiral that would pave the way for Hugo Chavez to seize power in 1998. Chavez immediately passed laws which expropriated private companies expanded social welfare programs and increased State control over the economy initially these changes were popular but the policies over time severely strained Venezuela's finances and deepened the country's dependence on oil revenues following Chavez's death in 2013 his successor Nicholas Maduro continued implementing these policies amidst declining oil prices which precipitated a full-blown economic crisis by the mid-2010s Venezuela was grappling with hyperinflation critical shortages of basic Goods a collapse of public services and a drastic surge in poverty rates this economic crisis one of the worst in recent history triggered a mass Exodus with millions of Venezuelans fleeing their Homeland in search of better opportunities thank you [Music] Venezuela today is still very dependent on oil for its revenues while the country isn't producing nearly as much oil today the industry still accounts for about 95 percent of all export revenue from the country this means that Venezuela still hasn't Diversified itself enough to ensure a more stable economy this combined with the economic policies enacted by Venezuela's current president and sanctions issued on the country by the United States and other Western European countries has led to hyperinflation rates north of three thousand percent to put this in perspective the U.S which has been suffering from high inflation over the last year has averaged around eight to ten percent inflation and this has led to a huge Exodus from the country in 2015 Venezuela had approximately 30.1 million people but by 2020 that number had fallen to 28.4 million people since 2015 Venezuelans have fled to over 90 countries to escape the economic collapse between 2015 and 2017 Venezuelan immigration increased by 1 388 percent in Chile 1100 132 percent in Colombia one thousand sixteen percent in Peru 922 percent in Brazil 344 percent in Argentina and Ecuador 268 in Panama 225 in Uruguay 104 in Mexico 38 in Costa Rica 26 in Spain and 14 in the United States the good news in all of this for Venezuela is that the country does seem to have stabilized a little bit since 2021 Venezuela's economy has stopped Contracting and has begun to grow again but while that's great for everyday's Venezuelans it will take a long time for the country to emerge from the deep oil-filled hole it's dug for itself Venezuela is a tragic example of a country over relying on a single resource to support its economy while oil might seem like a boon to a country's pocketbook not accounting for climate change It ultimately led to a Venezuela that is poor today than any of its nearest neighbors I hope you enjoyed learning more about why Venezuela is so poor despite having so much oil if you did please subscribe to my channel if you want to watch more of my videos you can do so here thanks for watching see you next time

Channel: Geography By Geoff

Views: 447,675

Keywords: Venezuela, geography, geography by geoff, geography facts, geography now, geography quiz, geography youtube, how much oil does venezuela have, is venezuela rich, oil, real life lore, venezuela economy, venezuela inflation, why are people leaving venezuela, why does venezuela have so much oil, why is venezuela so poor, why is venezuela so poor if it has so much oil, why is venezuela socialist, youtube videos about geography

Id: iieBGozeODE

Length: 10min 51sec (651 seconds)

Published: Mon Jul 10 2023