Beginning and early stage of the Venezuelan oil industry

The aim of this thesis is to analyse the early development of the Venezuelan oil industry both in relation to developments in the oil industry worldwide and in relation to Venezuela's social and economic development. It is argued that both aspects are crucial for an understanding of the early development of the Venezuelan oil industry. At the level of developments in the oil industry worldwide, this thesis argue that developments occurred not because of lucky strikes in the USA or Venezuela but because developments elsewhere, namely in kerosene fired devices and the internal combustion engine, made oil an economic necessity for their practical application. Within this section the thesis attempts to refute allegations of an "oil war" between British and USA oil interests in Venezuela. Using original source material the thesis attempts to show that this allegation, widely published in the mass media of the time, really concealed the reality of an alliance between the big British and USA oil consortia against oil producing countries on the one hand and small oil companies on the other. Finally this thesis puts an emphasis on the existence of an "oil surplus" and the gap between the real oil cost and oil price. In the period studied technical developments in the internal combustion engine reduced the amount of "waste" in oil and therefore reduced the real cost of producing oil at the same as the increasing demand for oil products pushed the price of oil up. This gap as oil surplus, which has shown a tendency to increase over time, led to a position where it was possible for the bargaining power of oil producing countries to increase provided the country had the political strength to use this power. It is argued in this thesis that Venezuela did not begin to acquire this political bargaining strength until the 1930's. To develop Venezuela's natural riches after the 1870's a strong central Government to ensure stability was required. The old constant "caudillo wars" were no longer functional either to the Venezuelan ruling class or to the Great Powers wishing to exploit Venezuela's natural resources. The development of the Venezuelan oil industry assisted this process of a strong central Government. The development of this strong central Government, that of the dictator Gomez, has been portrayed by most Venezuelan historians as being totally subservient to the interests of the US oil companies. This thesis argues that Gomez v/as in fact more the representative of the Venezuelan ruling class at a time of change. And if remained almost permanently under the sway of the foreign oil companies it was because he was seriously constrained by their threatened, and at times actual, support of the Venezuelan opposition to him. However oil did introduce profound social and economic changes, and also. instability into Venezuelan society. And after 1950 this foreign oil company policy of threatening to topple Gomez by supporting "caudillo adventures" against him vias no longer viable