The longest running oil strike in Venezuela’s history threatens to undermine the presidency of Hugo Chavez, a hero to many poor people in South America, and could harm the U.S. economy by increasing the price of gas.

Since Dec. 2, 2002, workers at the state-owned oil company Petroleos de Venezuela have refused to work, severely reducing oil production and crippling the Venezuelan economy.

A group of business leaders, political parties and labor leaders banded together against Chavez and organized the nationwide oil strike to pressure him to resign and call early elections.

Chavez's rise to power

Chavez gained popularity as the former paratrooper who attempted to overthrow the financially corrupt presidency of Carlos Andres Perez in 1992. He spent two years in jail before he was pardoned.

Chavez won the presidential election in 1998 by a landslide, pledging to improve lives of the poor and rid the government of corruption and waste. He was reelected in 2000 promising a “peaceful revolution to eradicate poverty.”

Appealing to the poor

Chavez inspired hope among many Venezuelans and Latinos worldwide with his passionate speeches about Latin America's glorious history and nationalism, rekindling a sense of pride and esteem. Chavez also protested against international economic organizations and U.S. "imperialism," which he said exploited Latin America for economic profit.

Chavez helped rewrite Venezuela's constitution to provide more opportunities for minorities and indigenous people and he has increased government spending on programs to provide health care, education, housing and micro-credit loans – loans for small amounts of money – for the poorest Venezuelans.

Many of these poor are Chavez supporters. They have participated in simultaneous street demonstrations that support his rule during the general oil strike.

A fiery dictator?

Critics of Chavez believe that he is autocratic and tyrannical. After his 1998 election Chavez helped rewrite the constitution and extended the length of his presidency. He also created a law that gave him supra-congressional authority – the ability to pass a law without congressional approval in certain circumstances.

Using the power of the presidency, Chavez gave many jobs in the oil industry to his friends, regardless of their experience. He has also threatened to close down the privately owned press when reporters wrote stories critical of his actions and policies.

Oil and money in Venezuela

Venezuela -- historically one of Latin America's most stable democracies -- is the world's fifth largest oil producer and ranks among the top four U.S. suppliers. With the decrease in oil from Venezuela the price of gasoline in the U.S. has risen in recent weeks.

Venezuela's oil industry generates at least half of the government's income. However, only a minority of Venezuelans have profited from the oil boom: more than 65 percent of the population live below the poverty line.

Chavez has accused his opponents of belonging to an upper class elite that has wasted Venezuela’s oil wealth, leaving the majority of people to live in poverty.

Many in the business community don’t like his controversial economic policies, such as limiting foreign company access to Venezuelan oil supplies, which they believe are harmful to the financial stability and democratic structure of the country.

This same group briefly toppled Chavez’s government in April 2002, but he was able to regain control of the country shortly after he escaped from prison.

Alienating the West

Chavez has also upset many in the middle and upper classes by his close relationship with Cuba’s Fidel Castro, his fiery anti-capitalist rhetoric and interests in Communism.

His enemies, meanwhile, warn that he wants to be a Communist dictator.

Chavez has upset many world leaders by visiting dictators Muammar Qadhafi in Libya and Saddam Hussein in Iraq, declaring that oil-producing and exporting countries (OPEC) would raise oil prices at the expense of the West and the U.S.

A nation in crisis

In the meantime, the strike is costing the country an estimated $70 million per day. Venezuelans wait in long lines for gasoline and many grocery stores, banks and schools in wealthier neighborhoods are closed.

Chavez has attempted to maintain oil production by firing striking workers and replacing them with foreign oil crews, but the conflict has taken a toll on almost every aspect of Venezuelan society.

Recently U.S. State Department spokesman Richard Boucher warned that America has a great interest in resolving the situation peacefully.

"The effect on the oil markets, the effect on the region is great, and the fundamentals of the region ... supporting democracy in the region is very important to us," he said.

"It is a situation," he added, "where we do think that all the countries of the region have a very strong interest, strategic interest, in making sure that there is a democratic outcome."

-- By Annie Schleicher, NewsHour Extra