"Oil, the path to socialism." Photo: BHowdy (flickr)

As many welcome the recent drop in oil prices, Venezuelans fear what it may mean for them.

Profits from oil account for about half of Venezuela's revenue, making the country one of the largest oil exporters in the world. Since 1999, the year Hugo Chavez took office, much of this oil money has been used to subsidize food and support social programs that have brought millions of Venezuelans out of poverty. According to government records cited in a story by McClatchey's Tyler Bridges, 33 percent of Venezuela's population was living under the poverty line as of last year — down from 50 percent in 1999. Venezuela's debt, on the other hand, has increased from 6 percent in 1999 to 15 percent today.

As oil prices fall — and along with them, Venezuela's profit — chances are the subsidized food and social programs will start to decline. Chavez, however, has not expressed much concern about what the country's recent drop in income may mean for the economy. McClatchey quotes Chavez saying in October:

Should the oil price stabilize between 80 and 90 dollars — more than enough ... In the face of the global crisis, I guarantee Venezuelans the country will not be held back. . . . Venezuela has enough social, financial and technological resources to march on with economic growth.

Chavez also said Venezuela can tap into savings or get loans from friendly governments if necessary. He's also said the country can fall back on $100 billion in foreign reserves, although many economic analysts say this number is far too high and that a reduction in spending is the only option.

Franklin Rojas, a Caracas-based economic consultant, says Chavez has no other choice than to accept this economic downturn now that oil prices have dropped. Rojas projects that Venezuela's oil profit will fall $11 billion from last year. "The government was already running a budget deficit and a balance of payments deficit this year, at a time when oil prices were their highest. The situation will be serious for the country."

If public spending is cut, the consequences could be felt not only in Venezuela but in Cuba, Bolivia, Argentina and Ecuador. These countries, all of whom benefit from loans or subsidized oil from Venezuela, also may be forced to come down from their oil high.