As someone who has studied supply risk for nearly a decade -- and as someone who would defend the merits of free markets and free trade to the death -- you can imagine my interest in watching the socialist-led economic collapse of Venezuela of late. This is a country that went from having one of the better run oil firms in the world when it was privately owned to one that makes Gazprom look like a Six Sigma posterchild. And don't get me started on the socialist benefits of feeding the people. Why were the poor better off prior to Chavez -- and had access to bread and other staples -- rather than having to wait in Soviet-like rationing queues as they do today? So much for a people's revolution.
The latest chapter in Chavez's destruction of the formerly great nation speaks to the dangers of doing business with any suppliers, either: 1) doing business in the region; 2) dependent on feedstock or raw materials from the country; or 3) owning material assets in Venezuela (which could be seized by the government, leading to a supplier's financial distress). You can read about the latest fight over the seizure of assets and private property between Venezuela and Exxon Mobil here. This individual fight is the latest in a series of business and court moves after Venezuela decided to steal (nationalize is the socialist term) a $12 billion dollar investment in the region made by Exxon Mobil.
- Jason Busch