🛢️ The Venezuelan Oil Collapse

10 Brutal Lessons

Author

Adam Oxsen
May 14th, 2025

Hey there OilPatch Crew. Adam Oxsen here.

Ah, Venezuela. It’s downfall is a gut-punch of a story about how a country sitting on the world’s largest oil reserves turned fortune into failure. From corrupt leadership to reckless policies, Venezuela’s collapse is a masterclass in what not to do in the energy game.

Here are 10 hard-hitting takeaways from Venezuela’s mess to keep us sharp in the oil patch.

1. Even the Biggest Reserves Can’t Save You
Venezuela’s got 303 billion barrels—the most on the planet—but exports dropped 20% to 700,000 barrels per day in April 2025, the lowest in nine months, per Reuters. Resources don’t mean squat if you mismanage them.

2. Desperation Drives Exodus
The thread pegged 7 million fleeing Venezuela, but World Vision’s 2024 report ups that to 7.7 million, with 2.9 million in Colombia alone. Hunger and economic ruin pushed families to walk hundreds of miles for survival. Bad policy doesn’t just hurt economies—it breaks lives.

3. Nationalize Smart, or Don’t Bother
Hugo Chávez’s 2007 oil nationalization could’ve worked, but Venezuela didn’t reinvest like Norway, which built a $1.4 trillion sovereign wealth fund by 2025. Treat your oil wealth like an ATM, and you’ll end up broke.

4. Corruption Can Bleed You Dry
PDVSA lost $70 billion to embezzlement—officials lived large while wells died. A 2023 EL PAÍS report adds fuel to the fire, showing purges and the Petroleum Minister’s resignation amid corruption probes. Greed can gut an industry.

5. Price Controls Can Backfire Hard
Venezuela’s artificial pricing tanked the non-oil economy by 70%. When Maduro lifted some controls in 2019, inflation eased briefly, per Wikipedia’s 2025 update. Ignore basic economics, and you’ll choke your own supply chains.

6. Printing Money Is a One-Way Ticket to Ruin
A 20-30% monthly money supply increase led to 63,000% annual inflation by 2018. It’s Economics 101: flood the market with cash, and it’s worth less than dirt. Hyperinflation isn’t a glitch—it’s a death spiral.

7. Expertise Is Non-Negotiable
Firing 18,000 PDVSA engineers in 2002 after a strike gutted the industry’s brain trust. EL PAÍS notes this turned a meritocracy into a political circus by 2003. You can’t run an oil company on loyalty alone—skills matter.

8. Subsidies Can Fuel the Wrong Fire
Gas at $0.01/gallon cost Venezuela $10 billion a year in smuggled fuel. Subsidies meant to help folks ended up feeding black markets. Good intentions don’t mean good outcomes if you ignore reality.

9. Diversify or Die
The UAE’s non-oil sector hit 73% of GDP by 2025, while Venezuela stayed 95% oil-dependent. One built gleaming cities; the other became poorer than Haiti. Clinging to oil alone is a losing bet in today’s world.

10. Policy Failures Can Outdo Any Disaster
A 65% GDP drop from 2013-2021—worse than the Great Depression—came from pure policy failure, not war or natural disaster. It’s a rare kind of collapse, and a loud warning: leadership matters more than what’s underground.

Parting Thoughts
Venezuela’s story is a tragedy, but it’s also a wake-up call. In the oil patch, we’ve got to play smarter—balancing innovation, ethics, and strategy to avoid these kinds of self-inflicted wounds. Let’s keep learning and drilling smart!

Thanks for reading this edition of the Oil Patch!

Stay oily, my friend…and BE GREAT.

— Adam Oxsen

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