If you look at the country of Venezuela you will see a country in economic crisis, for a lot of reasons and one of them is the oil market. Venezuela’s biggest exports is oil and when prices were high, political ambition was even greater. When oil prices fell the economy fell to where it badly needs higher world oil prices. With the high prices, the government of the day used its oil wealth to influence other countries as it fought in words the US government influence. The politics are different. The oil giant Petroleos de Venezuela was one part oil producer and one part fulfilled government ambitions. Now days the government still has ambitions but the oil company does not generate the amount of money to pay for everything under the sun including its own bills. In an article written by Marianna Parraga of Reuters the other countries in the Caribbean that Venezuela has relationships with still want to be paid for services rendered. In Venezuela can not pay, then other partners including Chinese will. Alternatives are being found.

The wealth of Venezuela oil paid for many pet projects of politicians as well as providing a good living standard for the average citizen until the oil price collapsed. Venezuela did not create a oil fund similar to Norway; but spent the money, expecting the price never to fall. The fracking process in the US; the more efficient automobiles, a global economy which took a few extra years to recover and other factors play a role in the decline of the price of oil.

Linking to dividend paying stocks, when prices are high and the company is rolling in money, they can do whatever they wish as long as it is legal. However times will change and prices fall and then cash is king. When you are buying shares in a company ensure the company can pay its bills (what is the cash flow) and it can temper its expectations for the long term future.

There are more questions than answers, till the next time – to raising questions.