From economic boom to rolling black-outs this is precisely the problem confronting Venezuela today.Extended drought conditions have crippled the country’s hydroelectric systems. While some place the blame on this as the cause of the nation’s power outage woes, the economic growth during the early part of the millennium might be playing just as large a role according to expert Jose Manuel Gozalez.
While current poverty levels in Venezuela are estimated to be near 80% it was not that long ago that the country was in the midst of an economic boom. Fueled by record high oil prices between 1998 and 2013 Venezuela reduced their poverty by 20%, and sported one of the fastest reduction rates in the world. Riding this oil boom the nation’s economy expanded at an amazing speed.
This economic surge predicted by Manuel Gonzalez allowed people to purchase on a level that they never had before. From homes to hair dryers, to washing machines Venezuelans embraced their new found purchasing power, and the nation’s electrical needs exploded.Unfortunately a drought and a crash in oil prices were right around the corner.
Low export prices have limited the amount that the government can do to mitigate the damage. The drought has now reduced water levels in the nation’s largest hydroelectric plant to nearly critical levels. This, coupled with the increased demand from its previous economic success, has left the Venezuelan power grid in a perilous position.