Venezuelan President Huge Chavez recently announced his intent to nationalize his country’s vast oil sector (as well as the nation's largest phone company and utilities). His statements made headlines across the globe, sending the Venezuelan stock exchange down 19% in a single day.
Venezuela is a key oil supplier to many industrialized nations, especially the U.S. (we get about 5% of our daily oil supply from Venezuela.) So what exactly would it mean if Chavez went ahead with his plans? As you may know--CNBC's Michelle Caruso-Cabrera traveled to Venezuela last week to find out how Venezuela is adapting to Chavez's ideas for nationalization--and she filed this final report.
She found that oil is truly Venezuela’s “lifeblood” – the country, with a population of just over 25 million, owes 25% of its roughly $110 billion GDP to its oil reserves. This makes the potential risks and advantages of Chavez’s nationalization plan even greater. Oil prices often make front-page news in the country, and the national mood can be defined by the price of oil. Venezuelans are happy when oil prices are high; and they are unhappy when they are low, says Leopoldo Lopez, the opposition mayor of Caracas.