The 20th Century Expansion of Venezuela’s Oil Economy

Venezuela pic

With a background in Venezuelan banking and investment spanning decades, Julio M. Herrera Velutini manages a Puerto Rico-based bank that also has offices in Florida. Julio M. Herrera Velutini maintains a strong family tradition in the financial sector, as one of his ancestors was a political and banking pioneer in the 19th and early 20th century.

As his family rose to prominence, Venezuela itself was becoming known around the world through the ascendancy of oil. A fundamental part of the national economy, oil came to the fore in 1912 with the drilling of the first well. Standard Oil and Royal Dutch Shell quickly dominated the country’s market, with Venezuela taking a pre-eminent world role in a rapidly growing field. Between 1920 and 1935, oil went from accounting for less than 2 percent of exports to more than 90 percent. With the passage of the Hydrocarbons Act in 1943, oil became dominant and the previously strong agricultural industry fell by the wayside.

Venezuela first moved to nationalize its oil industry in the early 1970s, but a major decline in prices in the 1980s hindered progress as OPEC countries broke production quotas. To this day, oil continues to play an outsized role in Venezuela’s economy, with some observers noting more diversification would be healthy for the country.


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