As oil prices dip below $30 per barrel, petroleum-producing nations around the globe are reeling. But of all the oil exporters, Venezuela appears to be the worst off, with Saudi Arabia and Russia vying for second place.
To qualify for this dubious honor, a nation must have a sizable chunk of its economy dependent on oil production, which leaves it vulnerable to economic distress.
Venezuela is a witches' brew of soaring inflation, gross domestic product contraction, political instability and ham-handed government. As energy expert Daniel Yergin, vice president of research firm IHS, said last year, "Venezuela is highly vulnerable to turmoil and even financial collapse."
Compare Norway with Venezuela. For both, oil is around a quarter of GDP. Both also have socialist governments. The difference is that Norway's economy is projected to grow by 1.4 percent this year, while Venezuela's would shrink by 3.3 percent, according to a survey of economists.
Credit ratings reflect differing levels of trouble. Russia has a junk-bond-level of triple-B-minus from Standard & Poor's, and Venezuela sports a near-default triple-C. Saudi Arabia, like other Gulf monarchies, has a fairly high double-A ratings. But the Saudis have other weaknesses.
Certainly, no nation is exempt from the oil downturn -- which stems from emerging economic superpower China's slowing growth and Saudi Arabia's insistence on continued high production to maintain its market share.
In the U.S., where oil is a relatively minor part of economic output (even though America now is the world's largest petro-producer), the grim energy outlook has helped shake the stock market. Even a bastion of stability, like tiny, oil-rich Qatar, whose growth estimate is 4.5 percent, has felt the tremors. Due in part to ebbing oil income, the kingdom last week scrapped its U.S. cable-news venture, Al Jazeera America.
And it's unlikely that things will improve soon for the pricing of crude. The long slide in oil prices, which now stand at about $29.50 per barrel on the New York Mercantile Exchange, shows no sign of firming or rebounding anytime soon. Some forecasters even see a $20 price before long. In mid-2014, oil was over $100.
The reverberations of the worldwide oil rout are felt most strongly in:
Venezuela. The list of woes is long for this South American country, which nationalized its energy industry in the 1970s, amid surging oil prices. A series of dictators used the torrent of energy revenue to maintain social harmony, and Venezuelans enjoyed a range of government services such as free health care and food subsidies. After hardline leftist Hugo Chavez became president in 1999, he expropriated a lot of private property. The nation began to suffer from capital flight and spiraling inflation.
Following Chavez's death, things went from bad to worse, especially when oil took a dive. His equally authoritarian successor, Nicolas Maduro, faced food shortages, plummeting currency values and violent street protests. Despite government price controls, he estimated the current inflation rate at a 100 percent, although others put it much higher. The Caracas-based consulting firm Ecoanalitica, for instance, pegged it at more than 200 percent.
Meanwhile, the nation's central bank said GDP fell by 7.1 percent in the 12 months ending in September. And Barclays Capital said it doubted Venezuela could meet debt maturities due in the fall, even if oil prices move back up. (The firm does think it will be able to pay off $1.5 billion in bonds due in February.)
Although the opposition party won an overwhelming majority of the legislature in December elections, Maduro has shown no yen for compromise. A lengthy political battle seems in store.
Russia. On the surface, Russia's deteriorating economic conditions seem to have no affect on President Vladimir Putin, whose public approval ratings top 80 percent. That's likely owing to his adroit appeals to nationalism -- backing a separatists' war in nearby Ukraine and using military power to aid his ally in Syria -- thus distracting Russians from their bread-and-butter woes. He has lambasted the West for its sanctions against Russia, meant to protest its Ukraine involvement.
Moscow's economic miscalculations have been legion, starting with its 2015 budget set for $50 oil. Things didn't turn out that way. The ruble has plummeted. The government is considering plans to cut its budget another 10 percent this year, after a similar reduction in 2015. Inflation is in double digits and a poll showed that the number of Russians who cut back on food spending rose to 58 percent late last year, from 37 percent at year-end 2014. GDP shrank 3.8 percent last year. Russia, with almost five times the population, has around the same low level of personal wealth as Venezuela.
Saudi Arabia. The Saudis do have some real advantages that mask their underlying dilemmas. The desert kingdom can dig into ample reserves or borrow internationally. Venezuela and Saudi Arabia have similar population sizes (29 million and 27 million, respectively), but the desert kingdom is far wealthier. GDP per capita for Saudi Arabia is $24,161, easily double that of the South American nation, which hasn't reported results lately.
Nevertheless, there are a number of worrisome fracture lines around the Saudi edifice. As the Arab world's leading power, by dint of its vast oil reserves, the nation has long funded a series of subsidies for its citizenry. But since oil accounts for 80 percent of its revenues, now it faces an unusual government budget deficit. So officials are responding by cutting energy and other subsidies for the monarchy's subjects.
More long-term, some 4.5 million young Saudis will enter the labor force over the next 15 years, which presents a challenge as that is three times the number of jobs generated during the recent 10-year oil boom. McKinsey & Co. consultants figure that level of unemployment will quadruple to 20 percent and household income will slide by a fifth.
To be sure, a reversal of oil prices would mitigate these negative trends. But no one is expecting that for some time.