Gas prices and car ownership

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An interesting post about Venezuelan gasoline consumption from UC Berkeley Professor of Economics Lucas Davis. He says that Venezuelans don’t own more cars per capita than comparable countries in the region, so the large consumption must be because they own old gas guzzlers.

I think he should also mention the fact that car ownership may be in line with the continent, but car *usage* is a lot higher because it’s so damn cheap to use it.

The money graph:

Copyright: Lucas Davis
Copyright: Lucas Davis

1 COMMENT

    • Kepler,

      That was the first thought I had on reading the Posting. You are exactly right. A lot of that consumption is Brazilian and Colombian consumption.

    • “The OPEC nation exported 30,000 barrels per day (bpd) of gasoline and naphtha last year, according to state oil company PDVSA’s annual report. But it imported an average of 66,300 bpd of the same fuels from the United States alone, according to U.S. Energy Department data.” Not such a bad deal for the empire.

  1. Of course the ridiculously low price of gasoline fuels* usage… in no other country do you see such an abysmal quantity of gas guzzlers on the street, both old (Fairlanes, Galaxies, etc) and new (SUV’s, sport cars, etc).

    *pun unintended, though welcome 🙂

    • Indeed, and then you can really see how chavismo saves the world…
      Realistic prices and 2/3 of gasoline would probably be saved. I doubt anybody does really care if mileage is low, so there would be old (and not so old) motors burning fuel as if it were for free, well, it is for free.

      • Yes, but Juan’s graph of relatively low motor vehicles/1M pop., in spite of giveaway gasoline, is more a reflection of an abysmally-low real Venezuelan minimum wage (about $100/mo.at current parallel market prices), coupled with incredibly high motor vehicle prices (a 20-year old/+ used gas guzzler in Venezuela costs several thousand $, even at the parallel rate, when you couldn’t even get $100 for it in a trade-in in the U. S. ).

  2. What about the lack of supply ? Or you have never been on a list to buy a car? People that with those lazy Bs need to buy things , what they are going to do save them? there is another thing, the problem with the “Rutas” and Cooperativas de transporte… Those are really old horrible, but they charge exorbitant prices to be used –> and that is supposed to be the public transportation. They collude, and even if you want to be an entrepreneur and get a new bus line between cities, they could threaten you if “you pass through their city”( It happen to a friend of mine, after he received all the permits, to have a new line between to towns in Venezuela . You have to get the “permission”of “ruteros of the cities you could pass in your way!

  3. Raise estacionamiento rates [ like to cad$ 6.50 per hour] and
    watch car usage plummet, bikes and motos become cursi,
    and hiking and jogging a must. Who knows? even beer bellies
    will shrink.

  4. Per capita useage is also probbaly higher because the chances of a random act of getting your brains blown out if you step out of the car at night or go for some exercise are considerably higher than in other countries in the area.

  5. Not that they are petrol guzzlers, but I wonder how much petrol is consumed by the ubiquitous motorcycles that one sees all over, especially in Caracas.

    • Your average motorcycle gets at least 40 miles to the gallon. Most get substantially more, in the 50s to 60s, depending on maintenance, modifications, driving stlye, etc. Compare that to the por puestos, hummers, jeeps and other vehicles that get <20, and in some instances <10.

      I was shocked when a few years ago, a friend bought a Lexus SUV that received a whopping 7 MPG city, 10 highway. And that's here in the states when gas was then around $3. Either way, some people get utility from sucking gas through a swizzle stick, others through a 6 inch pipe.

      I think the car ownership issue isn't really indicative of anything when it completely lacks the miles driven per car. Get the miles data and then we have something interesting to talk about. For example, my brother-in-law has spent quite a bit of money over the last five years restoring a 67 Mustang right down to ordering in the specialty parts from abroad; but now that it is 99% complete, he can't drive it anywhere because he suspects he'd be carjacked…despite the penny/gallon cost of gas. Ownership? Yes. Miles? 0. Gas? negligible.

  6. The graphs shows that there is no relation (even if the Venezuelan datum is removed) between the price of gasoline and the number of vehicle scaled per person. Raising gasoline prices will do little to decrease the number of vehicles purchased (hence the traffic problem) in citoes like Caracas. The graph in Raul Urdaneta’s link does show the money story. Even without the Venezuelan datum, there is a negative relationship between price and gas usage, with Venezuela being a positive outlier. So, raising gas prices should go a long way to reducing the number of miles put in cars, and hence congestion. The gas-guzzler argument is debunked by the Cuban case.

    • In the post above, I was unclear. I should have said that if there is a premise that higher gas prices will result in fewer cars, the data are not consistent with the premise.

  7. People here don’t mind leaving their cars running idle while they load them or unload them or whatever. Also, most everyone warm up their cars when they first start them up in the morning. I never did that in the US, even the the temperature was 10 below.

    I drive my car to the bakery, even though it’s only a couple of blocks away. Didn’t use to, but my family made me do so to avoid any safety issues …. and we live in a nice area.

  8. An interesting comparison, in Colombia, people with gas guzzling SUVs (especially older ones) and taxi drivers have switched extensively to natural gas, as it’s much much cheaper even with the investment of installing a new tank and the other adaptations. Natural gas has the disadvantage that cars lose some power (especially at high altitudes) but it makes a lot of sense if you have a big car (SUVs) or drive around all day. Taxis in Bogotá “se cuelgan” a lot on our steep hills, sometimes they have to push a switch that allows them to use gasoline and get that extra umph to get up a hill, but they still save lots of money with the change. It’s more and more common to find gas stations that offer natural gas. In Brazil, something similar happens with biofuel, for instance. Even in Colombia, gas is up to 10% ethanol.

    In other countries in South America people will find ways to reduce their gas consumption, with other fuels or just having fuel saving habits (If I stop for over one minute to wait I will instinctively turn off the car, taxi drivers in lines (such as the airport) will turn off their cars and inch them forward each turn by pushing them in neutral) while in Venezuela it doesn’t make a difference if you leave your car idling for 5 or 10 minutes.

  9. If gasoline ever becomes scarce in Venezuela, the price will rise regardless of government intervention. A black market will develop fast that will sell to the highest bidder. Just like gasoline is smuggled into Columbia for arbitrage.

    Socialism is analogous with shortages. In fact, it is absurd that the country with the world’s largest oil reserves has to import gasoline. Venezuelans do not have wait to see what socialism can do for their country. They only have to look at Venezuela today.

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