You’ve probably noticed that filling up your car with gas is a lot cheaper than it
was a few months ago.
That’s because the price of oil has fallen, and while that’s good for the consumer,
for countries like Iran, Russia and Venezuela, whose economies rely heavily on oil exports,
it spells disaster.
Reports suggest that Venezuela has been hit particularly hard by the oil price drop.
But why?
And what is the country doing to do help solve the problem?
Well, with one of the largest oil reserves in the world, Venezuela relies heavily on
oil exports, in fact, oil generates around 95 percent of it’s hard currency income.
So, as oil prices have dropped by over half since June, the Venezuelan economy has really
suffered.2 The results of which can be seen in the lives of the Venezuelan people.
The country relies heavily on imports for food and other necessities.
It’s reported that long lines for the state run grocery stores are now the norm, as food
supplies are extremely limited.
Venezuelans are being pushed to the limit and the army has even been called in to patrol
food queues and keep order.
Medical supplies are also a rare commodity in Venezuela.
Unfortunately, Venezuelans have been in this position before.
Prior to oil prices falling, the country had been in a deep recession, with out-of-control
inflation.
Food and medical supplies have been in short supply for years and economists are placing
the blame on Venezuelan President Maduro and his unsustainable policies.
Currently, the government funds free health care, state education, food and gas subsidies.
Venezuela also provides oil to 13 other countries within the Caribbean basin for what many experts
argue, are giveaway prices.
Until now, Maduro has been reluctant to make changes to these costly policies as he strives
to continue former President Hugo Chávez’s popular socialist ambitions for Venezuela.
So with his people on the verge of starvation just what is President Maduro doing about
the situation?
Well, in January 2015, Maduro went on a tour of China, Qatar, Saudi Arabia, Iran, Algeria
and Russia in a bid to secure some financial aid for Venezuela.
Experts argue that it was a desperate move, but Maduro did manage to secure a 20 billion
dollar investment deal with China and significant financing from Qatari banks.
But critics argue that the money still isn’t enough to provide the economic relief that
Venezuela desperately needs.
With the situation showing no signs of improving, widespread protests have broken out across
the country, but these demonstrations have only been met with threats of violence from
the government in order to keep public order.
There’s no doubt that tensions between the state and it’s citizens have reached a boiling
point and even Maduro has acknowledged rumours of the numerous coup plots to overthrow him.
To learn more about how low oil prices are hurting other countries too, take a look at
our video now