The First Country to Collapse from Lower Oil Prices…

by James DiGeorgia,

I have previously warned that the price collapse might not be over and that it’s entirely possible that oil will spike even lower, perhaps hitting $40. Barron’s last issue pondered a low of $35 a barrel.

What’s more, I’ve been telling my readers that despite the spin that U.S. and Canadian fracking and oil sands caused oil’s collapse, this decline was actually triggered by Saudi Arabia and the other Sunni Muslim oil kingdoms of OPEC.

Why?

It was their way of undermining Putin’s Russian government and Iran’s theocracy that require $105 and $140 oil to meet the cash needs of their governments. By lowering oil, the Sunni oil kingdoms might be forced to withdraw support from Syria’s Assad government and undermine Iran’s nuclear weapons and long range missile programs.

Now, I want to alert you to the first victim; the first government that WILL fall as a result of these low oil prices — and it could happen any day …

Venezuela has the largest proved reserves of oil in the world; a whopping 297.57 billion barrels of oil. Venezuela’s President Nicolas Maduro Moros, a former bus driver, was the man who inherited the Venezuelan Presidency after the death of former President Hugo Chavez, and was handpicked as his successor.

However, thanks to the socialist policies of Hugo Chavez, and the nationalization of the country’s oil industry years ago, Venezuela’s energy infrastructure is actually in a state of collapse. The country’s oil production keeps falling roughly a million barrels a day.

Oil is literally Venezuela’s lifeblood. An incredible 97% of Venezuela’s foreign earnings come from oil and the government needs $120 oil per barrel to balance its incredibly bloated budget.

Having nationalized the assets of major oil companies, there is no outside investment capital willing to risk investing money in Venezuela’s oil industry.

The decline in the price of oil came to little more than half of what the country needs to operate. The reality that Chavez and Maduro’s socialist revolution is completely unfriendly to capitalism has plunged the country into a financial and social crisis.

Maduro’s initial response last year was to punish business owners and blame them for the plummet in the country’s currency, forcing them to sell their inventories of goods for much less than they cost to replace.

The country’s black market is a result of the war on business, capitalism and free enterprise. Now, with oil at $65 a barrel, even the black market is falling apart because the country is sinking into a deep economic depression.

Inflation is at 60% and the Venezuelan economy has shrunk 5% in the first six months in 2014 …

Extreme shortages of food, medicine, toilet paper, shampoo, soap, milk, eggs and all the consumer basics are so bad that Maduro actually had the audacity to implement fingerprint scanning this past summer at grocery stores in order to limit people in how much they buy…

Professionals like doctors, lawyers, teachers, engineers, programmers, etc … are fleeing the country as fast as they can.

This past weekend, I threw a small party at my home with several current and former Venezuelan nationals who STILL own homes in the country. During our time together, I asked them to give me a non-emotional assessment of Venezuela. They were unanimous in their belief that President Maduro is on borrowed time.

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