Over the past few years, Mexico’s financial landscape has been undergoing a painful transformation, largely due to the sudden drop in oil prices seen worldwide. Just ten years ago, 35 percent of the government’s revenue was derived from crude oil production. As of last year, though, this had fallen to 20 percent as prices fell and the Mexican state-owned company Pemex reduced its typical 3.4 million barrel per day (bpd) production rate to around 2.2 million bpd.
While much of the United States has been figuratively dancing in the streets about the incredibly low gas prices as of late, others have not been so fortunate to enjoy the plummet. Rather, their economies have been suffering because of it. One such nation is Venezuela, which has recently entered into a recession due to the global lack of demand for oil. Oil has been Venezuela’s primary export for years, which accounts for 96 percent of its foreign currency reception.1 The central Venezuelan bank also noted 63.6 percent inflation between November 2013 and November 2014.
Global oil prices are plummeting and they are falling fast. As a result, Venezuela, which has the world’s largest known crude oil supplies, is left with an economy that is barrelling out of control. On January 22, Venezuela's oil price fell to $21.50 a barrel, compared to over $100 a barrel in 2014 (Yahoo News, 2015). As prices continue to fall, Venezuela’s surplus of oil stocks grow. Rising oil surplus, however, does not translate into food, medical supplies, and political and domestic stability in Venezuela, as President Maduro is quickly finding out.
In light of the recent economic struggles that Venezuela has been facing under the leadership of President Nicolás Maduro, Venezuela has declared a state of economic emergency in an effort to keep their collapsing economy stable.