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The fall of the Venezuelan oil trade to the United States

The fall of the Venezuelan oil trade to the United States

Posted by Dubraswka Aguilar on October 13, 2014

This is a story about Venezuela, as viewed through the prism of export-import trade data. It starts with two simple statistics:

Oil imports into the United States from the OPEC nation are down a relatively slight 1.95 percent through the first eight months of 2014, when compared with the same period a year ago. Cellphone exports to Venezuela, meanwhile, are down a stunning 69.70 percent.

A little context first.

At the end of 2008, Venezuela was riding high, at least as a U.S. trade partner. It ranked No. 10 that year among all countries in U.S. trade. That is the only time it has finished among the top 10. It was the third nation — after Canada and Mexico — to ever represent the Western Hemisphere on that list. Trade topped $64 billion; the oil was flowing.

This year, Venezuela is the United States’ 19th most important trade partner, according to WorldCity analysis of the latest U.S. Census Bureau data available. No major trade partner has fallen as significantly.

What story, then, do those two simple statistics tell? What does it mean that oil imports, at least when compared with a year ago, have fallen so little while cellphone exports have tumbled so precipitously — and what does any of it have to do with South Florida?

At the risk of oversimplification, the first might have something to say about the government, which runs Petroleos de Venezuela, or PDVSA.

The second, the statistic about cellphones, could speak to the condition of the people — and is far more troubling.

If you are interested in using trade data to gauge the health of Venezuela’s state-run petroleum industry, or at least adding data points, the first instinct might be to look at Houston, the top Customs district for total trade with Venezuela and this nation’s oil-importing leader. Based on that, you might conclude — with Venezuelan oil imports into Houston down $742.05 million through the first eight months of 2014 compared to the previous year — that PDVSA’s wheels are coming off.

We will leave PDVSA’s state to others to decipher and debate but what is happening with oil imports this year, when compared to last, is largely a shift from Houston to nearby Port Arthur, Texas.

Where Houston garnered more than 40 percent of all Venezuelan oil imports into the United States five of the seven years between 2006 and 2012, the percentage has dropped to 32.06 percent this year. That’s the lowest percentage since at least 2002, as far back as the year-to-data data we use goes. Picking up market share have been New Orleans — which like Houston is above 30 percent — the aforementioned Port Arthur and Mobile, Alabama.

Make no mistake, Venezuelan oil imports into the United States are well off the pace of the 2008 record total of $43.73 billion. Through the first eight months of 2008, the total stood at $32.33 billion. Through the first eight months of this year? A big drop, to $18.39 billion.

But the 2008 total was something of an aberration, as was Venezuela’s ascension to the United States’ top-10 ranking that year. Other than those first eight months of 2008, when the total topped $30 billion, Venezuelan oil imports have topped $20 billion only twice — in the first eight months of 2011 and 2012.

When discussing Venezuela and oil, there are numerous factors at play beyond PDVSA’s well-publicized output troubles: simple things like price fluctuations and increased oil finds in the United States and Canada, as well as Venezuela’s need to send oil to China to repay loans.

Just as Houston was a natural, if misguided, place to look to contemplate Venezuelan oil imports, Miami is a natural place to look at cellphone exports to the South American nation. While Houston exports more to Venezuela than the Miami Customs district, those exports tend to be energy-related: gasoline, pumps and compressors, heavy machinery parts and the like.

By way of contrast, South Florida’s top three exports to Venezuela this year are computer parts, cellphones and medicine. Generally, things people use, particularly the last two.

Overall, Miami exports to Venezuela are down $673.68 million through the first eight months of the year from the same period of 2013. That’s a 25.41 percent decline in one year. They are down $1.26 billion over the last two years, a 38.87 percent decrease.

Venezuela, which at this time in 2013 ranked No. 5 among South Florida’s top trade partners for overall trade and No. 3 in 2009, ranks No. 7 in 2014. Things are not going in the right direction. Buying power is down.

Cellphones, which had been the leading Miami export to Venezuela for five years after replacing medical instruments and devices in 2009, are down 65.77 percent from 2013 and 82.17 percent from 2011, the record year. That suggests pain at the personal level.

Medical instruments, valued at $152.80 million through the first eight months of 2008, are worth $46.93 million so far this year. That’s a decrease of 69.29 percent. While cellphones can be viewed as a necessity in only the most liberal of definitions, young people in the Middle East and Hong Kong might suggest otherwise — medical devices are clearly generally life-improving at a minimum to life-saving. The second most important export in 2013, the category has slipped to No. 8 this year. Again, not a good sign for the people of Venezuela.

Computers, often but certainly not exclusively a personal purchase, were running at a record pace through August of 2007, valued at $239.78 million and the leading Miami export to the Andean nation.

So far in 2014, the total for computer exports is $49.22 million — a decrease of $190.56 million, or 79.47 percent.

In much the same way that Houston has lost market share to other Customs districts for oil imports, so too has South Florida lost market share for overall exports to Venezuela — from a high of 44.48 percent in the first eight months of 2009 to a record low 29.31 percent so far in 2014. But there’s a key difference.

There is no shift. Exports from South Florida to Venezuela are going away. That’s the story.

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