Part of it has to do with expensive price controls, which in the long run hurt businesses by discouraging businesses from producing products that are subjected to price controls. Also, the decline in the value oil has made the process of implementing price controls more costly for the government due to declining oil revenues. A possibile increase in the value of the dollar has forced the Venezuelan government to possibly issue more of its own currency to obtain US dollars to support its oil trade. This creates inflation. Price controls have also discouraged the development of other industries Venezuela could use to sustain economic vitality during periods of weak oil markets. These are some of the reasons I can think of that are causing Venezuela’s economic problems.

Brian Ghilliotti