The Lights Are Going Out In Venezuela
Linette Lopez
BusinessInsider.com
Dec. 4, 2014
Parts of Caracas, the capital of Venezuela, are experiencing blackouts, according to Reuters.
It’s not the first time the country has experienced serious problems with its electrical grid. In June a presidential ceremony was interrupted and transit grounded to a halt when widespread blackouts hit the country. In that instance, the darkness was due to a power plant failure.
This round of outages are hitting at a crucial time for Venezuela. Oil prices have plummeted over the last several weeks, and the commodity makes up 95% of Venezuela’s exports. Officials advocated for a cut in oil production at last week’s OPEC meeting but were rebuffed.
Now traders fear that, without enough oil revenue, default is the end game. The country has few options in terms of how it can cut spending. The government has committed to continuing expensive social programs started by late-President Hugo Chavez.
Venezuela’s foreign minister has also said that the country will continue with its Petrocaribe oil program for neighboring states in which oil is sold to members at a steep discount.
Raising oil prices at home is also an uncomfortable option. Venezuelans get a massive discount on the commodity, but with groceries and other goods are already very scarce and expensive in the country where the inflation rate is over 60%. Citizens wait for hours to enter stores to buy rationed goods.
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