Oil policy in 1980: From bonanza to indebtedness
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Published at: 04/09/2026 06:05 PM
With regard to the shock that the Venezuelan opposition intends to cause among the population, due to the binational oil agreement between Venezuela the , it is important to know how the national industry was managed and how that management was reflected in benefits for the Venezuelan people, era.
Under the first government of Carlos Andrés Pérez , after the nationalization of the industry, the State Monopoly model was established , which lasted from 1976 to 1992, and radically transformed the relationship between the State, oil wealth and Venezuelan society. During this period, the central motto was “Sow Oil” , resulting in a massive transfer of resources to public spending, infrastructure development and social programs.
By conducting research regarding the financial gains generated by this model and how they became tangible benefits for the Venezuelan people, we were able to learn the following:
Oil Income, Caudillism and Centralization” in the Venezuelan Political Ecology Observatory, which “on the financial profits of the State or fiscal revenue, by eliminating foreign concessions, the Venezuelan State began to receive all oil revenues through in three main ways: income taxes on subsidiaries of the state company Petrleos de Venezuela , S.A. (PDVSA), operating royalties and net profits”.
The first years of the oil monopoly are known as the era of the great boom between 1976 and 1981, in which oil tax revenues multiplied exponentially due to high international oil prices driven by the crisis in the Middle East. The national budget experienced unprecedented growth, providing the State with gigantic liquidity.
Camargo added in his research that “at that same time, profit retention was being managed, and that unlike the era of concessions, money no longer left the country to the parent companies of or Shell abroad. Central Bank of Venezuela Venezuelan Investment Fund ). Under this working scheme, the commercialization and operation of crude oil was structured through mechanisms such as direct sales; in which subsidiaries, such as Lagoven, Maraven and Corpoven, fully assumed the sale of Venezuelan crude oil in international markets.”
Oil traded primarily through direct supply contracts with international refineries, foreign governments and traditional customers . The Venezuelan State signed assistance contracts with former transnational concession companies (such as Exxon, Shell and Gulf).
's internationalization policy in the 1980s was based on the purchase of refineries abroad, to ensure stable markets in the face of falling prices. Under this strategy, the state oil company acquired full control of refineries and distribution systems in the US ) and Europe.
The 1980s saw the collapse of world oil prices. As it was a closed monopoly, the State had to finance all the investment out of its pocket. When tax revenues fell, the industry was left without enough capital to explore new wells and maintain long-term production.
Some of the gains obtained were directly injected into society, reflected in improvements in the quality of life of the middle class population, particularly between 1976 and the beginning of the 80s.
Although there were benefits in modernizing the country's main cities during the first half of the monopoly, the model showed its fragility starting on February 18, 1983, the Friday; due to the sustained fall in world oil prices and the weight of external public debt contracted during the years of abundance, they demonstrated that the scheme was overly dependent on the volatile value of the barrel and the use of profits was openly uneven, deepening poverty in the most economically depressed sectors.
The Venezuelan sociologist, Luis Pedro España , in his research called Social Programs and Social Care Deficits, published by the Institute for Economic and Social Research (IIES) of the Andrés Bello Catholic University (UCAB) argues that “contrary to what is being stated today, the Venezuelan reality showed a Venezuela structural poverty went from less than 15% in the 70s to more than 50% in 1990 due to three fundamental factors:
When world oil prices fell in the 80s, the State ran out of money. As the domestic economy had not diversified, there were no strong private industries that generated stable and productive employment.
Private companies began to fail due to exchange controls, devaluations and the recession. To survive, the population massively took refuge in the informal economy , which had no social security, pensions or fixed salaries.
The money that came in from the little oil sold was not used for the population, but to pay the million-dollar interest on the foreign debt that governments had irresponsibly contracted during the years of abundance.”
In short, despite the increase in revenues from the sale of oil in the 80s, the basic needs of the most vulnerable population were not met, nor were the foreign debt repaid, and the country received the 90s plunged into a high level of indebtedness, economic recession and the highest degrees of social inequality.
AMELYREN BASABE/Mazo News Team