"The (Venezuelan) economy will endure difficult times in years to come, no doubt," said Chavez earlier this week in a nationwide address, noting that the economic difficulties facing countries like the United States have yet to hit Venezuela.

However, the Venezuelan leader said he was certain Venezuela would endure economic hardships to come.

Acknowledging the uncertainty in the world economy and the falling price of oil, which makes up the vast majority of Venezuela's export revenue, the leftist Chavez called for a reduction of state spending in 2009 following years of wide-raging spending on social programs and discounted oil sales for allies in the region.

Venezuela's handling of its oil industry amid difficult economic times could prove crucial to efforts by Chavez to amend the country's constitution to allow him to run for a third term in office in 2012.

"I am ready, and if I am healthy, God willing, I will be with you until 2019, until 2021," he said earlier this month. Last year Chavez lost a constitutional referendum on several issues, including term limits.

Trouble in the oil sector, both at home and internationally, could prevent Chavez from getting the amendment he'd need to maintain the Venezuelan presidency.

Hoping to stem the tide of Venezuela's falling oil revenue, Chavez and the country's leading energy officials have called for the Organization of Petroleum Exporting Countries to further cut oil production across the board, in hopes of halting the decline in the barrel price of oil.

At home, Venezuela in November told oil customers that production levels would be cut to counter falling oil prices, part of the OPEC agreement to reduce production across the board.

Venezuela's state-run oil and gas firm PDVSA is cutting production by 129,000 barrels per day, according to Venezuela's Oil Ministry and PDVSA officials.

The decision comes on the heels of the recent decision by OPEC to cut production across the board by 1.5 million bpd.

Venezuelan Oil Minister Rafael Ramirez prompted OPEC leaders to cut production levels even more in hopes of stemming the recent dramatic drops in oil prices.

Continually falling oil prices could prove detrimental to Venezuela's wide-ranging spending on projects as diverse as social programs at home, military spending and discounted petroleum sales to Venezuelan allies such as Cuba and several other Caribbean and Central American countries.

The Venezuelan budget for the coming year is based on a price-per-barrel average of $60. With the global price of oil currently hovering around $70, Caracas should be able to meet its projected spending for 2009.

However, some speculate that the Venezuelan government could be forced to rethink some of its more costly projects, both at home and abroad.

The falling price of oil has prompted Venezuela to urge OPEC to set a "minimum barrel" price for oil in the $70 to $80 range.

Meanwhile, falling oil prices also would force Chavez to reconsider his professed desire to reduce oil sales to the United States in favor of alternative trade partners.

While Venezuelan oil exports to the United States have dropped noticeably over the last year -- falling 11.7 percent in the first quarter of 2008 alone -- a sustained drop would become economically unfeasible were oil prices to continue falling.

Past threats by Chavez to cut off oil exports to the United States altogether seem even less likely.

As the fourth-largest exporter to the United States, Venezuela can hardly afford to shut off supplies to the United States, even for a short while, said Patrick Esteruelas, a Latin America analyst for the New York-based think tank Eurasia Group.

"The Venezuelan government has become more and more dependent on oil, and oil exports to the U.S. in particular, making it highly unlikely that Venezuela will cut off oil supplies to the U.S., despite the latest threats," said Esteruelas.

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