Money for nothing and your lights for free

Allegory of chavismo’s electric policy

There really should be a word for it: the systematic mismatch between the things that cause outrage in our public sphere and the ones that cripple our society’s capacity to offer folks a decent life. Kleptodysplasia, maybe?

That’s what was running through my mind as I read news that, after yet another year of fixed nominal prices amid double-digit inflation, domestic demand for oil products rose 22.6% in the first half of 2012, with diesel-fired electric power plants now hogging a simply obscene 300,000 barrels a day of the stuff.

A little context is needed to grasp the criminal insanity of this situation.

If sold abroad, the diesel we diverted to power generation would have earned $400 for each man, woman and child in the country just in the first half of the year. That’s money the state fails to take in because PDVSA still doesn’t have its shit together enough to deliver the nation’s huge reserves of Natural Gas to the power plants where they’re needed, and so has to divert much, much more expensive diesel to them instead.

Figured at the more realistic green lettuce rate, we’re talking about BsF21 per person per day. For an average household of 5, that’s BsF19,000 gone up in smoke, just like that, in six months.

Imagine what BsF19,000 would mean to the family of one of the inmates in PGV. Imagine what BsF21 per day would mean to the 4 million Venezuelans who now live on less than BsF25 per day. Just think of it.

But diesel is boring and opportunity cost is abstract and so none of this elicits more than a yawn from your average newspaper reader. It makes my blood boil.

Because we’re not even talking about graft here. This isn’t about dysfunction-born-of-greed, which might be morally reprehensible but is at least explicable in terms of despicable people acting in self-interest. This isn’t even about that.

This is about simple, straightforward waste born of a heady mix of incompetence and disinterest, crippling the nation’s capacity to meet its people’s most basic needs.

And what’s our National Assembly busy with? The JCCaldera case! 

Kleptodysplasia por el buche, no joda…

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  1. See it the positive way, that is all money Capriles-government could have if it manages to get the things right! But yes, it is so sad, so crazy…

  2. Mis-allocation of resources is a symptom of socialism and central control. Chavez does not understand economics but does understand political graft. If someone told him a switch to natural gas would allow him to give an additional $1 billion to Castro, it would happen the next day.

  3. What’s really annoying & frustrating is hearing the managers of Cortolec promising every vacation time that Margarita will have sufficient electricity for the vacation period.

    Then, of course, every time there are excuses that “demand” has exceeded expectations or due to the excessive heat they need to manage the distribution which translates to 1½ (or more) cuts various times during the week.

    Dear managers of Cortolec – I’m not an engineer however I have lived in Margarita for more than 20 years. Every year that I have been here tourists have arrived every Christmas / New Year’s, every Carnaval, every Semana Santa & every August /September.
    I would also like to remind you that there are far less tourists than in previous years due to failing transport to Margarita & no foreign tourists.
    Also every September that I can remember it has been hot.

    Maybe it’s that the current management is not from Nueva Esparta & just doesn’t realize that the same things happen year in & year out. To prepare for these events requires PLANNING which is obviously sadly lacking.

    The Christmas vacation period will be arriving in 3 short months. There will be lots of extra people in Margarita – be forewarned! Maybe you can do some planning now to prevent more cuts.

    Hay un camino!

  4. I am convinced many amongst my friends/family would yawn as soon as I pronounce ‘opportunity costs’ in a conversation, yet this diversion of funds you describe is appalling. The question is how to make complex information available and easy to grasp to the general public. In the case of the Spanish crisis, for instance, I believe the videos by 29yo Aleix Saló (>6million viewers) definitely contributed both to a greater understanding of the issue by the huge non-specialised audience and to a sense of missing accountability. Still, without belittling the great efforts of the Capriles campaign, I have seen very little pedagogical content of this sort channeled by any of the candidates.

    Kleptodysplasia? Maybe. Lack of innovative and creative forms of communication? Definitely.

  5. Really good article. I am working on something similar to what you just described on the opportunity cost of this electric crisis. A lot could have been done here if we had better electricity pricing and electricity markets.

    If you have subsidized gas prices, add grid unreliability, a pinch of cheap dollars for diesel generator imports, and you get what you just described. Massive unsustainable waste.

  6. (sigh) Opportunity costs are everywhere here in Vzla. I think about it every time I’m in a traffic jam. Every time I cannot accept a check in my business because it may “rebotar” due to signature differences. Every time I see the lines in the banks. Whenever I need to deal with the bureaucracy and paperwork – hours wasted – to make transactions that should take seconds (purchase of $ through SITME or CADIVI for trips or to pay for school). Every time lights go out and the fact that I had to purchase a generator at work and an inverter at home (rather than investing those resources in something more productive or enjoyable). Every time I hear more weapons or war ships or planes were purchased rather than solving some real problem.

    I know that am mostly focusing of the opportunity cost of time, productivity really. But it’s what I think about and see everyday: so much wasted time, so much wasted effort.

    • I just returned from the bank to pay our monthly Seguros Social. I mean EVERY month we have to line up at different banks to pay this as well as Banavih & Inatur. Then there’s the Alcalde that we have to pay every 3 months. Not one of these can you pay on-line.
      In addition there’s Cortolec & HidroCaribe. All need you to line up to pay.

      As ECG says it’s just all so frustrating & inefficient.

  7. “This is about simple, straightforward waste born of a heady mix of incompetence and disinterest, crippling the nation’s capacity to meet its people’s most basic needs.”

    like the majority of Venezuela’s problems are… (sigh)

  8. I think they are solving this, at least in part. The Tocoma hydroelectric plant is just about to start coming on line. Once that happens they may be able to shut down all the diesel turbines, or at least most of them.

    The opportuntiy cost lost to gasoline consumption and electric consumption not being properly priced would still be there though. But their cash flow should improve.

    • “The Tocoma hydroelectric plant is just about to start coming on line. ”

      Have they built the infrastructure to handle this new plant? Transmission lines, etc.?

      If I remember correctly from the crisis 2 years ago this was one of the main faults. They didn’t have the infrastructure to carry the power to different parts of the country.

      This won’t help us much here in Margarita where we depend on an antiquated undersea cable that continually fails along with numerous “band aid” diesel generators that keep failing..


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