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What will Venezuela do with its oil? Top five energy challenges after Chàvez.

With the passing of Hugo Chávez, the issue of what Venezuela chooses to do with its oil moves to center stage for the energy industry – and for environmentalists. Here are five energy challenges that Venezuela will have to face.

4. Oil bartering

Inti Ocon/Retuers/File
A street vendor pushes his cart past a mural depicting, from right, Venezuela's late President Hugo Chavez (C), Cuba's former leader Fidel Castro and Nicaragua's President Daniel Ortega (L), in Managua March 6, 2013. Chávez didn't use oil simply as an economic tool; he used it to prop up governments and score political points.

Chávez didn't use oil simply as an economic tool; he used it to prop up governments and score political points. In 2011, for example, Venezuela received 344,000 metric tons of food in exchange for oil – rice from Guyana; coffee from El Salvador; sugar, coffee, meat, and more from Nicaragua; beans and pasta from the Dominican Republic. Venezuela has refined oil for Ecuador at discount prices, sent diesel to Syria, and struck a deal to sell Cuba discounted oil in exchange for medical treatment for Venezuelans. These efforts helped prop up governments that Chávez favored.

In 2005, he offered to send emergency supplies to American victims of Hurricane Katrina. Through Citgo, a PDVSA subsidiary, he gave away heating oil to several hundred thousand poor Americans for several years running.

In last year's presidential campaign, opposition candidate Henrique Capriles promised to put an end to such gifts. He was handily defeated. But such foreign aid is expensive and increasingly difficult to justify at a time when Venezuela's own economy is struggling with rampant inflation and increasingly severe electricity blackouts.

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Mark Sappenfield
Editor

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