Oil has been known and widely used within Venezuela for centuries by settlers and indigenous people. The indigenous people used it on their boats and tools; they would also be the ones to later show it to the Spaniards. In 1878, under the Presidency of General Francisca Linares Alcontora, the Compania Petrolia del Tochira began the first commercial enterprise for the exploitation of oil. With the dawn of industrialization coming, Venezuela would quickly be discovered to have vast resources of oil. Military rule continued into the 1900s, and under the regime of General Juan Vicente Gómez the country became stabilized, due mainly to oil. Venezuela soon became the world’s leading oil exporter and prospered. Little money, however, reached the people and much of the nation remained poor. “The earliest oil concessions were granted in the 1910's with the first substantial quantities of oil being exported in the early 1920's” (embavenez-us.org).

The Zumaque well was discovered in 1914 on the east coast of Lake Maracaibo, which would open Venezuela to the world energy markets. This incident would help accelerate the exploitation of oil throughout the entire country. These efforts being dominated by foreign companies like the U.S. and Britain. The U.S. and Britain had the technology and managerial resources to capitalize on the enormous oil reserves. It was during this period, due to the quick exploitation by America and Britain, which would cause numerous governmental problems in Venezuela. “The incidence of oil and the changes experienced in the all-encompassing politics which arose beginning in 1914, are evident in the following comments made by the historian Ramon J. Velazquez in his book Venezuela Moderna (1976). ‘The appearance of oil and its immediate exploitation by the American and British companies created administrative and governance problems unknown until then’” (geographia.com). Oil production boomed in the 1940s and 50s, which enabled President Marcos Pérez Jiménez to reward members of his government with large sums of money and modernize the country. It is plain to see that even in the earliest periods of exploitation; the enormous wealth that went along with the oil in Venezuela had a tremendous influence on every thing in Venezuela.

In the 1960’s the Organization of the Petroleum Exporting Countries (Opec) became a permanent, intergovernmental Organization, created at the Baghdad Conference on September 10-14. The founding members were Venezuela, Saudi Arabia, Iran, Iraq, and Kuwait. “Opec's objective is to co-ordinate and unify petroleum policies among Member Countries, in order to secure fair and stable prices for petroleum producers; an efficient, economic and regular supply of petroleum to consuming nations; and a fair return on capital to those investing in the industry” (opec.org). On January 1, 1976, all the properties, plants and equipment of the foreign operated companies, as well as the modest assets of the Venezuelan oil companies, became the property of the state. Venezuela from that moment on, would work through its own companies to execute and control each and every one of the activities pertaining to its oil industry. An oil boom in the mid-1970s saw enormous wealth pour into the country, though, the vast lower class benefited little. Oil prices dropped in the late 80s and once again the country was thrown into crisis. (geographia.com)

Venezuela, has one of the largest proven reserves of oil, over 74 billion barrels. And each year Venezuela’s dependency on oil to maintain its economy was growing. So in 1997, the government announced an expansion of gold and diamond mining to reduce reliance on oil. During the 1990’s Venezuela was more of an antagonist to Opec, then a member. For years their policy was maximum production of oil, which usually defeated Opec’s efforts to reduce production by its members. Reducing oil production drives the price up so that countries can get a higher price per barrel of oil. Soon after Chavez took office in 1998 Ali Rodriguez Araque, who would later run Petroleos de Venezuela (PdVSA), became president of Opec. One of Chavez’ biggest goals was to change PdVSA’ policy of quota busting. Araque and Chavez would both make international tours of the Opec nations, shoring up relationships and getting plans in order to lower production, in an effort to raise the price of oil. This was a significant change to the prior policies regarding oil production, and would pay off. In a years time Opec brought the price of oil up from U.S.$11.95 in March 1999, to U.S.$20 by the end of the year.

The United States reaction to this change in production and renewed alliance with Opec is difficult to gauge. For nearly twenty years they have gotten Venezuelan oil at rock bottom prices. They do not seem to enthralled with the current government and have never been known to appreciate higher oil prices. Before long, the economy would come crashing down due to the strikes being held by the CEO’s, managers, and technicians of PdVSA and other corporations and business’. Oil production was down to a few thousand barrels a day and tankers were not leaving the Venezuelan coast. Chavez stuck to his position and defeated the strike in a little over two months. Currently production is back up to pre-strike levels and the company is moving forward. Provided there are no more strikes and Chavez follows through with his pledges, the people of Venezuela could, for the first time, see some real benefit from their large oil reserves. “World demand should reach over 86 million barrels per day by 2020’ (gasandoil.com).