Who does Venezuela they think they are, California?

The OPEC nation has suffered three nationwide blackouts this year, and chronic power shortages have sparked protests from the western Andean highlands to San Felix, a city of mostly poor industrial workers in the sweltering south.

Shoddy electrical service is now one of Venezuelans' top concerns, according to a recent poll, and may be a factor in elections next month for governors and mayors in which Chavez allies are expected to lose key posts, in part on complaints of poor services. ...

Experts say Venezuela for years has skimped billions of dollars in electrical investments, leaving generation 20 percent below the level necessary for a stable power grid and increasing the risk of national outages. Officially Venezuela has a capacity of 22,500 megawatts for a population of 28 million people, but a sizeable proportion is not working, analysts say.

And while Chavez has won praise for investing in health and education, his government has done little to repair local distribution systems that deliver electricity to end users, from barrio residents to business and industries. ...

Pastora Medina, a legislator representing San Felix and nearby cities suffering chronic power problems, this month tried to bring the issue up in the national Congress in Caracas, but the legislature's leadership refused to let her speak.

Several hours later, as the legislature discussed a South American integration plan created by Chavez, Congress itself lost power for around 10 minutes.

But it is going to be much more difficult for Chavez to merely keep up with the spending he has already implemented, let alone new spending, given that the price of oil has been cut in half.  

The same tumbling oil prices that led OPEC to slash output last week threaten to send Venezuela's economy into a tailspin, and put an end to President Hugo Chavez's ambitions to expand his socialist revolution at home and abroad.

To cope with plummeting oil revenue, the source of half the government's spending, Chavez may have to cut domestic handouts and foreign aid. The first items likely to go will be arms purchases from Russia, oil subsidies for Cuba, and job-creating local projects such as bridges and subways, economists say. ...

Venezuela may be poised to repeat the economic collapse it suffered in the 1980s at the end of its last oil boom. Former President Carlos Andres Perez, employing policies similar to Chavez's, lavished petrodollars on public works projects, foreign aid and nationalizations in the late 1970s, setting the stage for a 1983 currency devaluation and spending cuts that sent millions of Venezuelans into poverty. ...

Chavez is already spending beyond his means, posting a $7 billion budget deficit in the first half of 2008, a period of unprecedented oil prices, on a $63.9 billion budget for the year.

Economists' estimates of the minimum oil price Chavez needs to sustain his economic policies range from $120 a barrel to $65. Oil fell 93 cents, or 1.4 percent, to a 17-month low of $63.22 a barrel today on the New York Mercantile Exchange.

Below $80 a barrel, it's likely that Chavez will devalue the bolivar for the first time since 2005, sparking a surge of inflation and a drop in real wages because of Venezuela's reliance on imports, said Gustavo Garcia, an economics and public finance professor at the Instituto de Estudios Superiores de Administracion, a Caracas business school.

Venezuela's benchmark 9.25 bond due in 2027 fell 20.5 cents to 50.79 cents on the dollar from 79 cents a month earlier, pushing the yield to 18.83 percent, according to JPMorgan Chase & Co.

The government, which has historically calculated its spending plans based on a conservative forecast for oil prices, is projecting a $60-a-barrel average for the 2009 budget, and output well above today's level. Oil options contracts to sell crude at $50 by December almost tripled Oct. 24.