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ECONOMIC ANALYSIS:

Thinking about Venezuela

by Fred Cederholm
Hugo Chavez has done good things, but he has also made major mistakes which negatively impact the image of his entire nation. Gee... this analysis could describe an elected chief executive who is a whole lot closer to home!
I’ve been thinking about broadcasts. Actually I’ve been thinking Venezuela, global contacts, the CIA Fact Book demographics, energy imports for June 2007, PR/ politics, and Hugo Chavez. Our neighbor across the Gulf of Mexico/ Caribbean presently plays a major role in the ongoing world energy drama. This is particularly true for US/us. Yet, just what do we know (or understand) about Venezuela?

You see last Friday I was once again a phone-in guest of host John Sanchez on Vheadline’s Venezuela News Hour radio program broadcast from New York, and available at the Vheadline.com website as a MP3 file. Vheadline features my weekly column TH*NK*NG on-line and has done so almost since I began writing it four years ago. I am hardly an expert/ specialist on Venezuela, but this nation-state-neighbor to the South often figures into my columns on banking, finance, energy, and global politics. I do my homework and feel comfortable about what I share with readers (and listeners).

My first real encounters with Venezuela/ Venezuelans came in the early 1970’s in college at the University of Illinois. I knew several Venezuelan students thru my dorm. My very first accounting Professor (Edward Elliot) was also the Chief Accountant for OPEC and was a high level consultant to the Venezuelan Oil Ministry - his outside responsibilities figured predominately in numerous classroom discussions and teaching examples. They stirred my interest in following both events in Caracas and the Maracaibo Basin. When I went to work in public accounting in Houston, two of my biggest audit work assignments involved oil traders who enjoyed highly profitable business relationships with Venezuela.

This Bolivarian Republic at slightly more than 912,050 square kilometers is roughly twice the size of the State of California. Its population of over 26 MILLION (31.6% aged 0 - 14, 63.4% aged 15 -64, and 5.1% aged 65 and over) has a higher literacy than the US1, a lower infant mortality rate than the US, and a longer life expectancy rate than the US2. It sits on atop one of the largest energy mother loads in the western hemisphere. Despite its highly favorable trade balance of petroleum, petroleum distillates, petro-chemicals, and agricultural products (exports exceeding imports by well over two to one), it has an inflation rate of roughly 15% and its currency (Bolivares) has recently lost about 5% relative to other world currencies. It has a 9% unemployment rate with 38% at or below the poverty level. The US is its largest trading partner for both imports and exports. Venezuela’s founding father Simon Bolivar is often compared to George Washington of the US. Both nations overthrew colonial overlords via revolution.

US/us continues to depend on foreign suppliers for more than two-thirds of our current level of energy consumption - with an ever narrowing mix of the suppliers. The top eight sources of Uncle $ugar’s crude oil imports for June 2007 were: Canada (1.873 Million barrels per DAY--MBPD), Saudi Arabia (1.501 MBPD), Mexico (1.392 MBPD), Venezuela (1.135 MBPD), Nigeria (0.893 MBPD), Iraq (0.573 MBPD), Algeria (0.504 MBPD), and Angola (0.502 MBPD). Uncle $ugar’s top eight sources of total petroleum imports for June 2007 were: Canada (2.375 MILLION barrels per DAY--MBPD), Saudi Arabia (1.529 MBPD), Mexico (1.529 MBPD), Venezuela (1.364 MBPD), Nigeria (0.968 MBPD), Iraq (0.709 MBPD), Algeria (0.573MBPD) and Angola (0.514 MBPD).

Rightly or wrongly, the larger than life (and outspoken) persona of Venezuela’s elected chief executive Hugo CHAVEZ Frias represents this nation to the entire world. His bellicose rumblings and his active diplomatic (sic) commentary and involvement in the sovereign affairs of his neighbors, the world energy markets, and the Middle East constantly garner headlines in news globally. He sees his plans and actions as the ONE true route to furthering his agenda for the world and his country. He is clearly controversial and is regarded both as a savior and the anti-Christ by large groups of people. He has done good things, but he has also made major mistakes which negatively impact the image of his entire nation. Gee... this analysis could describe an elected chief executive who is a whole lot closer to home! I’m Fred Cederholm and I’ve been thinking. You should be thinking, too.


Copyright 2007 Questions, Inc. All rights reserved. Fred Cederholm is a CPA/CFE, a forensic accountant, and writer. He is a graduate of the University of Illinois (B.A., M.A. and M.A.S.). He can be reached at asklet@rochelle.net.

To “audit” this column and to learn more about the subjects discussed, please check out: Footnotes:
1. The literacy in Venezuela is higher (despite the CIA claims we have 99%+ literacy in the US) Worldwide the US is something like 61st or 62nd place in literacy - Venezuela was ranked in the mid high 30's. So... that one is a no brainer.

2. The life expectancy - if the obesity 6% adjustment is made to the US, life expectancy is longer in Venezuela - not by much mind you, but still longer - if you go with the 12% adjustment, the gap becomes much wider - with the much higher life expectancy in Venezuela.

If you were to stratify the populations by race comparing native western hemisphere indian, negro, and Hispanic expectancies between the US and Venezuela - Venezuela does even better. The statified life expectancies for Northern European, Eastern European, and Asian ethnic groups really do a lot to skew the US life expectancy upwards. On ethnicity alone, the groups which make-up well over 90% of Venezuela's population do a lot better down there than here. SO... I feel my observation on life expectancy is valid as well when you consider either the ethnicity issue or the proposed obesity adjustment.

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This story was published on September 4, 2007.