Is Venezuela running out of oil? This Bloomberg article certainly suggests it, and if so, it’s an earmark of a communist regime. There’s no such thing as a communist regime without shortages.

Russia the breadbasket ran out of wheat.

Cuba the sugar king ran out of sugar.

Vietnam the rice bowl ran out of rice.

China the Middle Kingdom ran out of everything.

And now, Venezuela, with the largest oil reserves in the Western Hemisphere, is having trouble with its oil production, enough so that the energy-saving measure of natural gas substitution has been introduced to the domestic population, which consumes very little oil compared to the amount Venezuela produces. Why would they need to scrimp on a population that uses so little anyway? Why scrimp there? Does that little bit that’s used domestically really matter that much? Is the margin that thin?

Venezuela’s oil production has gone to hell and it’s not getting better. In 1998, Venezuela was the Number One exporter of imported oil to the U.S. Today, it ranks Number Six, and only sells the U.S. 10% of its oil – see the Energy Department site for proof, it’s not 15% as the news media lazily describes. Last year it was 15%, this year it’s since slid 10%.

Venezuelan dictator Hugo Chavez has driven his country’s oil company straight into the ground. Windfall profits on high oil prices that should have gone into reinvestment in order to ensure maximum production and maximum profits is instead being squandered on welfare handouts for immediate consumption. The oil industry’s seed corn is being eaten on this Hugo Chavez development model. Now, there are signs that Venezuela has ruined its oil fields, can’t pump gas, and still has contracts to fulfill. Already CITGO is importing oil from other countries because it can’t get enough from Venezuela.

With Hugo Chavez saying the country will consume natural gas because it must scrimp in order to have enough to sell abroad, alongside artificial price controls that ensure that Venezuelans will pay just 19 cents for a gallon of gas, there are some significant and inevitable shortages ahead indeed.

Even Hugo Chavez cannot escape the iron laws of economics.