If that is the case then it is the classical socialist model of public funds (the property of the people) not being used efficiently. Usually there is also great, even fantastic levels of inefficiency at the levels of production and distribution.
Most of the crude oil extraction equipment and technology was imported from the Western nations, and in most cases they are operated by personnel who have been trained in the Western nations. So there is not much inefficiency in the production. However, distribution is a mess. As a result of the insane subsidy, a large part of the petroleum products are smuggled abroad.
Again, "generally," when a nation experiences internal economic collapse, the black markets simply expand to cover the needs of the people, or most of them. However, when the government controls the food supplies at the point of a gun, mass starvation certainly can occur.
Personally I view this as a justifiable case for US intervention, but that's just me.
