NYT's Tina Rosenberg Goes to School on Venezuela's Oil, and Flunks

[Joanne98]

http://www.venezuelanalysis.com/analysis/2808
November 6th 2007, by Oil Wars

An interesting dichotomy has developed with respect to Venezuela. With a highly popular president and a booming economy the place has become, at least for the moment, downright boring. On the other hand, some in the international media seem to think that Venezuela’s economy is near collapse, its president virtually a dictator, its society is facing social convulsion, and its people can’t find enough food to eat.

Fortunately for Venezuela there really isn’t much more to this dichotomy than some pretty poor reporting. Case in point is “The perils of Petrocracy” in today’s New York Times.

The first problem with the article is it is a fairly large bait and switch. It starts off as if it is going to be about the economic problems that countries with lots of oil run into and whether or not oil is a help or hindrance for their economic development. That is certainly an important topic. Yet the article gets side tracked into a discussion of the current state of the Venezuelan oil industry and never gets back to the subject of oil and development. But more on that later.

Unfortunately even though the article is mainly about the Venezuelan oil industry it doesn’t even prove very informative about that as the author, Tina Rosenberg, clearly failed to do her homework. She doesn’t bother to familiarize herself with all the readily available information on the subject and when she talks to the former overlords of the Venezuelan oil industry – who just maybe have an axe to grind – she doesn’t even know enough to ask the right questions or bring up key facts which might cast doubt on their assertions.

For starters there is this complete misunderstanding of what the dispute over the oil industry is really all about:


In the 1990s, Venezuela’s state oil company was a sleek machine, an excellent exploiter of oil, well fed on its own profits. It floated above society, unmoored from the problems of the average citizen. Today, oil money feeds and educates poor neighborhoods. The purpose of the national oil company is not to produce more oil, but to produce Bolivarian socialism. These are two very different ways to handle a nation’s oil resource. Can either model show poor countries how to convert natural resources into sustained wealth? Few questions in economic policy are more important today.

Here Ms. Rosenberg has completely confused the issues of what Venezuela should do to develop economically – i.e., how should it use the oil revenues that it gets – with the other very hotly debated topic of how Venezuela should maximize it oil income – i.e. how should Venezuela use the abundant oil it has in the ground to generate the greatest amount of income. The dispute over how the state owned oil company, PDVSA, should be used is NOT between pumping more oil or “producing Bolivarian socialism” but between pumping more oil just to have a bigger oil company or pumping less oil to have higher oil prices and hopefully more revenue for Venezuela.
http://www.venezuelanalysis.com/analysis/2808

Another Judith Miller!