A politician's guide to the gas price increase

How much of our GDP went down the drain in this line?
How much of our GDP went down the drain in this line?

OK, opposition politicians, listen up. Here at Caracas Chronicles we enjoy beating up on you from time to time, but you might be surprised to learn that we don’t always enjoy it. We *want* you guys (and gal) to do well, and we honestly look for opportunities to root for you.

Most of the time you make it extremely hard.

So, with that in mind, I want to give you some advice on how to navigate the tricky rhetorical waters of the coming increase in the price of gas.

First, the facts: the rise in the price of gas … is a good thing for the country. Billions of dollars are wasted every year in a subsidy that disproportionately benefits the better off. There is simply no moral justification for giving away gas for free – none.

Free gas benefits the rich and the smugglers in the border; it clogs our roads and hurts the environment. The money that goes to the gas subsidy is money that’s not available for schools or hospitals. It’s really that simple.

Furthermore, it’s not a question of choice anymore – the country simply cannot afford to give away gas for free anymore. It’s come to a point where we can make the argument that the gas subsidy is directly related to our crumbling road network, our shabby electricity grid, our understaffed courts and prisons, the lack of shampoo in supermarkets … y pare usted de contar.

Now, I understand you guys are politicians, and you can’t really go out and say “the rise in the price of gas is a good thing.” You guys need to remain popular, and avoid the scourge of an entire country that thinks “it’s the only benefit we get from living in this hell hole” is a valid political opinion (how many times have we heard that today?). Politicians, understandably enough, are terrified of this issue. Not even Hugo Chávez himself dared slay this dragon.

So, in order to help you navigate the rhetorical waters you are about to inmerse yourselves in, I want to offer some tips.

If you want to relate the price of gas to, say,the subsidies to Cuba, you need to thread the needle. It’s OK to say things like

  • “the reason they are raising the price of gas is because they need to continue subsidizing Cuba;”
  • “they are raising the price of gas in order to continue stealing;” or
  • “they are raising the price of gas because the economy is bankrupt.”

All those things are technically true, and they make for solid talking points. I have no quibble with that.

However, it’s very different to say:

  • “we shouldn’t raise the price of gas until we end the subsidies to Cuba;”
  • “we can’t raise the price of gas until there is transparency in the government’s accounts;” or
  •  “the government claims there are plenty of dollars, so there is no need to raise the price of gas.”

All of those statements are highly misleading, and some are patently false.

The price of gas has to rise whether we subsidize Cuba or not. True, the Cuban subsidy is salt on the wounds of the middle class, but it’s not an either-or proposition anymore. And yes, we all want transparency, but if we wait for transparency to come, our economy will collapse – and transparency doesn’t come naturally to bankrupt countries.

Finally – of course the government doesn’t have dollars. They are lying, so there no need to repeat their lies and make them sound like they’re true.

Put it simply, discussing the price of gas as if it was something avoidable, or a choice we still have, is facetious. It is a sign of intellectual dishonesty to say that the government doesn’t need to do something when, deep down, you know it does. If it goes through with this, the government will be doing something that the opposition, had they been in power, would have been required to do anyway.

In raising the price of gas, the government is doing the dirty work of starting to clean up the mess they have created. That benefits you. There is no need to waste that capital by saying something stupid, by ruining your credibility on this very important topic. Criticizing them from the wrong angle, as if it was something that could be avoided, will only supply delicious YouTube nuggets that the government will use against you if, God willing, some day you are in power and have to raise the price of gas.

Anyway, guerra avisada and all that. Be careful with how discuss this issue. From this humble little corner of the Internet, we will be listening carefully, and we stand ready to pounce.

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  1. Me permito una sugerencia a los comentaristas: busquemos declaraciones de políticos de oposición y decidamos si están bien o están mal. Thumbs up or thumbs down. Pongan links si pueden.

  2. It might be an opportunity to say something to all those people who are going to get a rate increase on the unsafe, unreliable, private bus they take to work every day about the missed opportunity to build a comprehensive, safe, “dignified”, reasonably priced system of public transportation for el pueblo.

  3. We should not rise the gas prices as long as we are giving oil away to the cuban dictators. This is not under discussion.

    that’s enough. no hace falta mas paja “cerebral” to justify raising gas prices

    And by “paja cerebral” I mean that in this blog you abuse of it a lot when the reality is plain to see and construe

    • I agree with you, why should we accept to give more money to a corrupt administration that will just give it away.

      What the poster is arguing is that since there is no point in asking the goverment more transparency, we should just accept to give them more money for them to squander under the wishful thinking that some of it will be used in the propper way. I think that this it’s the perfect oportunity to denounce the lack of transparency and deny support for the hikes until we get something from it.

      • Completely agree.

        It’s really crazy arguing that since we cannot demand transparency from the goverment then let’s give them away more money to squander. U mad bro??.

  4. MCM: “Elevar el precio de la gasolina en Venezuela a 2,50 Bs/litro(0.189US$/galon) no resuelve el problema del contrabando”

    Kudos to her! I remember in the debates for the oppo Presidential debate she said clearly she wanted to increase gas prices, she has earned “I told you so” rights

  5. I’d first like to evaluate the government’s position (aside from it being entirely political) of selling CITGO (at around 10-15 billion bucks) before seriously considering a decrease in the gasoline subsidy (costing around 12 billion bucks a year, according to the government itself)

    • Are you seriously suggesting that it makes economic sense to sell an income producing investment that is an integral part of the downstream business model of PDVSA in order to pay for one more year of a gasoline give-a-way program that is proven to be wasteful and create gross economic distortions?

      The same logic would lead you to sell your house to pay for your drug habit for another year.

      • The very exact opposite! Me entendiste totalmente al reves.

        I am wondering how anyone can in their right mind think of selling CITGO instead of doing away with subsidies. If they desperately need those 10 billion dollars, the smart way to go about it is to kill the subsidies and keep CITGO.

        These fools are doing – or going to do – the exact opposite. Purely for political reasons.

        • Selling Citgo will cut sales to the US and make Venezuelas oil revenue totally dependent on Chinese purchases , That means that if the Chinese ever want to pressure the govt on something, for example, on lowering oil prices they ve got it by the ….’short and curlies’. If you prize sovereignty , as the regime claims it does then selling Citgo is a big step towards losing it to China.

          Doesnt anybody realize the implications of having most of your oil sales going to a country you owe your soul to !!

          • BB,

            You are right on all of the above, but there is also the strong likelihood of Citgo’s assets being attached to pay off judgements in the various lawsuits that are currently wending their way through the courts. In fact, it would surprise me if motions are not filed with the SEC to prevent the proposed sales by the plaintiffs.

          • That’s right, Roy. I imagine this has to do with lawsuits in the US against PDVSA that would end up with Venezuelan assets being seized. I’m not a lawyer to know if those motions to prevent any sale can be made.

            Does anybody out there know? If a party to a lawsuit can block the sale of an asset, then maybe the whole CITGO sale thing is a moot point.

    • I agree. But saying as Borges said “treason to the fatherland” is moronic. Instead, one must push for answers to tough questions of why is a money making branch going to be sold? And isn’t that like selling part of PDVSA?

  6. I will love to send back the “paquetazo” ball to the government. During the last presidential election this was an important slogan chavismo used against Capriles.
    As Juan mentioned, the YouTube nugget should be used by the opposition too. How many times they mentioned Capriles was going to raise gas, Harina Pan, and the exchange rate?
    I am completely in favor of raising gas prices, it should not be at international market rate but price should be enough to cover production cost including maintenance.

  7. Why ask the Oppo politicians to pussyfoot around the truth? They should be telling everyone exactly what has happened to force this and why it happened. Maybe when forced to by a small dose of reality, some people might actually listen.

    If you want the Venezuelan people to stop acting like immature spoiled brats, then maybe it would help to start talking to them like adults.

  8. Otro:
    El diputado de la oposición, Alfonso Marquina, sostuvo que el Gobierno debe empezar por sacrificarse antes de aplicar medidas que afectan al común de los venezolanos.

    “El problema económico no se resuelve imponiéndole a los venezolanos más sacrificios, el primero que tiene que hacer sacrificios es el Gobierno, por qué aumentar la gasolina antes que revisar los acuerdos internacionales”, ejemplificó Marquina.

    Detalla que el Gobierno está regalando más de 280 mil barriles todos los días a Petrocaribe y Cuba, con condiciones de crédito de 25 años para el pago, con dos años muertos y al 1%. “Maduro, ya que quiere aumentar la gasolina, dele a los venezolanos las mismas políticas de créditos”, conminó el diputado.

      • Understand completely. As a foreigner living here, it is sort of like watching a bad horror movie. You know that the baddie is waiting in the basement. The girl starts going down the stairs. You are saying to yourself:

        “No! Don’t go down to the basement!”

        “Uh oh… She’s going down to the basement.”

        “Oh no… she is going to get killed!”

        “Turn around now and get out!”

        “Oh shit! There he is! Don’t just stand there. Run!”

        “Sigh… She should’ve listened to me…”

  9. JC. I agree with your post, but I would amend the following:
    1. The subsidy helps the poor too, or whenever you see a gass guzller like a junkyard maverick or conquistador from the 70s and 80s do you think that a millonario is driving it? And you see plenty of junk on the streets.
    2. The biggest beneficiaries of the subsidy is the military, who control the smuggling of gas to colombia.
    3. “Criticizing them from the wrong angle, as if it was something that could be avoided, will only supply delicious YouTube nuggets that the government will use against you if, God willing, some day you are in power and have to raise the price of gas.” I think that, God willing, they have no chance to “get in power”. We need better “leaders”

    • The subsidy helps the poor much less than it should. Imagine how much more you could help the poor if you took the money from the subsidy and devoted it exclusively to pro-poor policies.

      Also, I don’t think the military is the biggest beneficiary. What gets smuggled is just a fraction of what gets guzzled.

    • actually, based on the INE,, if you have a Maverick or a Conquistador you are probably not poor. To you, given the Venezuelan wealth spectrum, it may seem like it, but you are wrong. Poor people can’t simply afford a car. The can barely afford the canasta basica (by definition).

    • 1. The subsidy helps the poor too, or whenever you see a gass guzller like a junkyard maverick or conquistador from the 70s and 80s do you think that a millonario is driving it? And you see plenty of junk on the streets.

      The data on “Motor Vehicles per 1000 people” does not support your case. Motor vehicle ownership in Venezuela is actually below the average for Latin America, which does not support your hypothesis that motor vehicle ownership is fairly high among the poor in Venezuela. As has been pointed out, if you have difficulty getting your hands on the canasta basica, you are not very likely to own a motor vehicle.
      And what does a junkyard Maverick go for in Venezuela sell for? Not $300, I’m sure. How many poor in Venezuela could afford to purchase a junkyard Maverick, or as we say in the US, a clunker?

      Motor Vehicles per 1000 people
      147 Venezuela
      152 Costa Rica
      161 Chile
      177 Latin America
      194 Uruguay
      197 Brazil
      246 Mexico
      314 Argentina

      This was already covered in CC: Gas Prices and Car Ownership.

      World Development Indicators Databank (World Bank)

      • Hace 4 ó 5 años se compraba una chatarra de esas de los 60-70 (Maverick, Conquistador, Malibú, Caprice) por unos 15-20 millones, lo que en ese momnento era una plata considerable. Un conocido compró un Fiat Uno del año 2001 hace dos años en aproximadamente 65 millones, y para el año siguiente, ya se vendía al doble, ahora si no mal recuerdo está llegando fácil por encima de los 200 millones.

        El que insiste que el “subsidio” (O eufemismo usado para no usar la rechabestia expresión “regalo del padre de la revolución”) era bueno para lo pobres, está apuntando fuera del perol.

        El pobre no tiene carro ni moto (Moto mucho menos ahora que los chances de que te llenen de tiros después que te la roban aumentan astronómicamente), el pobre anda jodido echando un cuarto y hasta un tercio de su sueldo en la basura pagando pasaje en un sistema de transporte público que es una soberana mierda.

    • Jau, your point would weight a lot more if more low class people had cars. I understand the “carrito por puesto” driver, but the 4-5 passengers he carries don’t have a car, the same goes with the vans and microbuses all around Venezuela.

      In the end, those who benefit are public transport drivers like those mentioned above, the military and those guys with 4×4 trucks listening to vallenato full volume wich could very well be the ones working with the military on the smuggling operations.

  10. Que felicidad tengo, ahora voy a pagar 27 veces mas de lo que pago para regalarselo a nuestros hermanos caribeños y a nuestros muy necesitados enchufados, es justo, ellos lo necesitan mas que nosotros.

    Now, on the serious note, I definitely agree that the insane subsidy is wrong, and, since the opposition it’s unable to provide encouraging hope in the foreseenable future; a goverment turn to more sane fiscal policies it’s really the only hope left for the country at the moment.

    But, given the goverment’s administration record of the last 16 years, I’m 100% certain that if they increase the price of gas 27 times, they’ll just increase the corruption 75 times and get the country in an even deeper position than where we are now, in any case, they’ll just keep printing unlimited amounts of money, I doubt they have learned the lesson yet.

  11. So… I am a huge supporter of raising the gas prices.

    But such a thing should not happen like that. I am going to demand honest reasons. I want Ramirez to say that we can’t afford it, and use this politically to say: “Well, then lets work together and see how we square this circle and lets get a detail look of the public accounts”.

    The opposition deserves an ‘I told you so’ and intelligently demonstrate with this empirical evidence how nonviable is Chavismo’s retarded welfare.

    • Rodrigo, I agree but: would you say the Venezuelan government is made up of people who consider pluralism an option? Who might see losing power as simply a hard, humiliating but real possibility, like they would in the USA, in Germany, even in Chile or Colombia?
      I don’t think so. High ranking Boligarchs can’t afford to lose power and that is what directs everyone of their steps including any admission of error.

  12. I guess just relating the gas price increase with the monstrous inflation leap awaiting to happen once it becomes effective should do part of the work (Maybe this september’ll have the infamous triple digits month-inflation leap?)

    But, as the lunacy that’s chavismo goes, their “bases” a.k.a. “los pendejos pat’ en el suelo” will justify it with any excuse such as “no es un paquetazo porque la derecha no lo está haciendo”

    Don’t you remember their reaction to the like 5 devaluations made by the idiot right after the wax doll expired? Who remembers “el pueblo no gana en dólares así que no les afecta el precio del dólar”? I remember, and they’ll use their brutalizing communications hegemony to lobotomize the stupid morons even more.

  13. If you want to relate the price of gas to, say,the subsidies to Cuba, you need to thread the needle. It’s OK to say things like

    “the reason they are raising the price of gas is because they need to continue subsidizing Cuba;”
    “they are raising the price of gas in order to continue stealing;” or
    “they are raising the price of gas because the economy is bankrupt.”

    The hope is that many who heretofore have accepted the current economic situation will now start to ask embarrassing questions to the powers that be, now that there is pain at the pump.

    Up to now, the gasoline freebie was somewhat like the “Pero tenemos patria” chant. “Yes, the economy is messed up, yes our patrimony is being shipped off to Cuba, yes there are a lot of corrupt politicians, but I get practically free gasoline, so let’s go party.” The loss of practically free gasoline gives Juan Bimbo one less reason to accept the way things are and to start pressuring those in power.

    The blockquoted response is a good way to phrase the gasoline increase.

    • Raising the price of gasoline will stop smuggling if it is raised to levels comparable to neighboring countries. No incentive to smuggle gasoline if the price is the same in Colombia and Venezuela. It is putting the cart before the horse to say that smuggling gasoline must stop before the price of gasoline may be increased. Higher gasoline prices will result in less smuggling, But if the price of gasoline is raised from US 5-10 centers per gallon- or whatever it is- to say US 50 cents or US $1.00 per gallon, this will not stop smuggling much, if the price of gasoline across the border is around US$4 per gallon.

      Regarding stopping ” regaladera de recursos”/resource giveaway: when Juan Bimbo is hit at the pump with a big increase in the price of gasoline, he is much more likely to protest “regaladera de recursos”/resource giveaways. If the price of gasoline is a freebie, he is much less likely to protest the regaladera de recursos/resource giveaway. Again, putting the cart before the horse.

  14. “Te doy la plata del subsidio de gasolina en tus manos para que la uses en lo que tú quieras.”

    What my candidate would tell the people.

      • Yes, without a doubt. Think of it this way, if you don’t give the people the cash, then you must be giving it to someone else. So whatever you have against giving a larger group of people a smaller amount of cash you should also have against giving a smaller group of people a larger amount of cash, especially if you’re leaving another group of people out of any cash.

        You can also think of it this other way, if the government spends that money on something, it is to get a value by way of good or service to the people. So, theoretically, a government is attempting to give its people the same value, but by giving the cash directly not only does it ensure a more thorough and fair distribution, it reduces overhead and points of corruption.

        So, again, yes.

    • The problem there is that there’s still loss in the gasoline production.
      The raise won’t benefit people at all, not a single bit, in the most logical and practical sense, all the cash gathered from it would go to the sinkhole that’s now the production of more gasoline.

      That’s the problem with price controls, when you insist on keeping them in an hyperinflationary economy like Venezuela’s, there’s no way to eliminate them without receiving a brutal punch from inflation.

      • Ralph,

        I’m not sure I understood your comment. Eliminating the subsidy (implying a price control elimination) does not directly affect production, but it does directly affect distribution, as in there would be no further reasons for taking the gasoline to Colombia.

        The distribution of the 12billionUSD to all citizens implies about 1USD per person per day, which implies the elimination of critical poverty in Venezuela, at least by the most used income definition of poverty. If you consider 5USD per day as something of hardly any consequence, ask a poor family of five. If you think that most of the poor people would spend that cash on a higher priced gasoline, you should first ask yourself if they are the ones currently using most of it.

        I agree that there would be a punch, but the difference is in who takes the brunt of the punch. For example, if the price of gasoline goes up, the brunt of the effect goes to those who have vehicles, who tend to be better off than those who don’t have vehicles. At the same time, if you give everyone the same amount of cash, greatest impact will be for those who are worse off since the amount of cash would represent a greater income percentage for those with lowest income than for those who are better off.

        Distributing an amount of cash to all the people directly and equally is much better for the economy than distributing the same amount of cash indirectly and unevenly to those better off, leaving many of the worst off without any gain from it.

        • A ver, pongo primero mi comentario anterior en español por si machuqué demasiado el inglés, y luego la respuesta a lo que comentaste después:

          Mi comentario fué que:

          “El problema es que sigue habiendo pérdida en el proceso de producción de la gasolina. El aumento no beneficiará en absoluto a la población, en el sentido lógico y práctico, todo ese dinero que se recaude irá al hueco sin fondo que es ahora mismo la producción de más gasolina.
          Ese es el problema con los controles de precios, cuando se insiste en mantenerlos durante economías hiperinflacionarias como la venezolana, no hay ninguna forma de eliminarlos sin recibir un golpe brutal de la inflación.”

          Ahora, respondo tu comentario:

          El proceso completo de la producción y distribución de la gasolina en Venezuela dejará de estar afectado por el cáncer del contrabando el día en que los precios de la gasolina alcancen el promedio internacional, y terminen más caros que en Colombia y Brasil, de esa forma se acaba ese peo que se ha extendido a todos los demás productos con precios regulados (ya todos sabemos cuales son).

          Cuando dije que el aumento no va a beneficiar a la gente, es precisamente por el hecho de que actualmente hay una pérdida de plata en la producción y/o distribución de gasolina, la única forma de que la gasolina creara una ganancia para que fuera invertida en otras cosas es que el precio de venta final de la gasolina diera para cubrir absolutamente todos los costos y de paso sobrara plata, cosa que cualquiera que trabaje sabe por sentido común; mientras el precio de la gasolina no cubra el costo y genere una ganancia, seguirá siendo como hoy en día, que la gasolina está regalada a pérdida, no hay que darle muchas vueltas a eso.

          Distribuirle dinero directamente a los “pobres” lamentablemente no es algo factible sin tener que montar una estructura burocrática monstruosa que primero determine si esas familias realmente necesitan ese dinero o no (Que en este régimen se convertirá en otra hidra multicéfala de corrupción), se supone que esa distribución se realiza es en infraestructuras y servicios, sí, los pobres pueden no tener para comprarse un carro, pero no deberían necesitarlo si existiera un sistema de transporte público que funcionara como debe ser, y no la mierda que actualmente existe en casi todo el país de carros piratas que cobran lo que les dá la gana y quieren aumentos de pasaje cada vez que les pica el trasero.

          Preguntas si los pobres son los que más provecho sacan de la gasolina, y la verdad es que no, el regalar gasolina como sabes y has dicho beneficia en realidad a los que tienen carro, porque pueden usarlo más, mientras que el que no tiene carro se sigue jodiendo con el transporte público. Ahora, te digo que la regaladera de gasolina tampoco es que ignoraba de plano a la gente que no tiene medio de transporte salvo busetas y carros por puesto, porque los choferes toman el precio de la gasolina como otro gasto más que le recuestan en el pasaje al usuario, que ahora es una minucia, pero el peo ya está llegando porque los sindicatos y gremios de transportistas ya empezaron a pedir subir los pasajes por el aumento de la gasolina (Porque ellos son los únicos que se creen con derecho a que su ingreso suba al mismo paso de la inflación).

          Porque los choros del régimen son tan estúpidos y ciegos, que no harán lo que haría falta de verdad para que el aumento del precio de la gasolina no se traslade a un vil robo a los bolsillos de la gente, que empieza por reemplazar todos los transportistas piratas y usureros con líneas de transporte público subsidiado que funcione de verdad al punto de que la gente no se vea en la necesidad de ajuro comprarse un carro para poder moverse de donde vive. Porque si eres pobre al no tener carro, moverte entre tu trabajo y tu casa, un gasto OBLIGADO, no debería comerse hasta un tercio de tu sueldo mensual mientras te queda lo demás para tu familia.

          Y eso del pasaje es sólo una cosa de lo que sería impactado por el incremento del costo de la gasolina y que se traduciría en más inflación, para cortar la biblia acá, te digo que pienses en todos los productos y servicios que en algún eslabón de su cadena productiva requieren de gasolina como un insumo, y ahí te vas a dar cuenta de todo lo que va a subir luego de que nos zampen ese aumento que será como un escalón de kilómetros de alto porque los muy tarados no se les ocurrió que era mejor subirla de a poquito de manera constante todos los años (…Claro, si el imbécil del muerto había decretado que nunca la subiría, ahora vemos a donde nos llevó su lameculismo)

          • Ralph,

            Gracias for tu respuesta, tan completa. Ahora entiendo. Creo que estamos de acuerdo en casi todo, en particular, lo de que la gasolina se tiene que vender al precio de mercado competitivo, sin subsidios. Solo así se producirá la cantidad, y se distribuirá a los lugares, que logre optimizar la ganancia. Cuando la gente dice “eliminar el subsidio a la gasolina”, yo entiendo que eso implica la liberación de precios y controles, lo que necesariamente lleva a lo que describes para eliminar el contrabando y demás problemas asociados al subsidio.

            Un aumento, para mí, implica que es un paso hacia la eliminación del subsidio, o sea, un paso en la dirección correcta para llegar a beneficiar a la gente. Por eso es que lo apoyo.

            Creo que no expliqué bien lo de la distribución de dinero a los pobres. Como lo propongo yo, no habría ninguna estructura burocrática monstruosa porque lo que yo propongo es distribuirlo a toda la ciudadanía. Eso casi no requiere burocracia. También sería sin condiciones, lo que no le permite al gobierno meterle mano al dinero ni meterle presiones a nadie en particular. De hecho, sería muy fácil sacarle las cuentas al gobierno.

            Estoy de acuerdo que si hubiese transporte público, los pobres no necesitarían carro, pero estoy de en desacuerdo con que que el distribuir dinero no lograría lo mismo por dos razones principales: A) de verdad crees que vamos a tener un gobierno que se porte bien con el dinero y monte un buen sistema de transporte público? B) El distribuir dinero a la gente hace que haya un mercado para los que quieran hacer negocio ofreciendo transporte, por lo que empezarían a haber servicios dirigidos a los pobres porque los pobres ahora podrían pagar esos servicios. Piensa que se trata de la misma cantidad de dinero, solo que lo que tu propones depende que nadie se robe el dinero y que nadie lo administre mal, mientras que lo que yo propongo es que cada persona se encarga de que solo los que ofrecen los servicios que quieren, donde lo quieren, y al precio que quieren, reciben el dinero. La gente va a poder pagar sus busetas y carros por puesto, pero el primer dueño de buseta o carrito que ofrezca limpieza, seguridad, buen servicio, le va a ir mejor, y va a expandir y tener empresa. La gente lo premiará con su dinero. Se creará el mercado de transporte para los de menos recursos simplemente porque los de menos recursos tendrían suficiente dinero para ser consumidores de interés para los que buscan hacer dinero del mercado.

            Considera que eso mismo que piensas de que el precio de gasolina en Venezuela tiene que competir contra el precio de gasolina en otros paises también aplica para lo del transporte. Las mismas reglas aplican. La liberación del precio y eliminación de controles es lo que permite que la producción (o la oferta) de un producto o servicio sea de la cantidad óptima, y su distribución eficiente.

  15. You know the funny thing? How no one wants to give a bigger picture of how things would function once petrol price hikes are in place.

    I appreciate Rodrigo mentioned the thing about the Maverick owner not being poor. Indeed, this is a confusing thing for many Venezuelans but that is the case: a Maverick owner is not poor even if he can’t even pay for the rent of normal flat. We need to bear in mind this when election times come and people ask us whether we want to help transport voters to the voting centres to counter the PSUV using PDVSA vans and military buses to transport its voters.

    Now take this: one litre of petrol in Germany or Belgium costs around €1.5 to 1.6.
    Venezuela’s cost of production is around €0.31 per litre.
    Now: if you have a monthly bus/train ticket in Germany or Belgium to go to work you pay in euros
    less than what a worker in Venezuela has to pay RIGHT NOW for his bus fares through the month.
    In comparative terms it is much cheaper to travel in Europe than in Venezuela (I am not talking about individual tickets, which are what some tourists buy).

    The fact that in Venezuela no one, NO ONE among the public figures, that is, seems to be willing to make the intellectual exercise to solve this issue, to make proposals, to think things through is quite damning. It says a lot about the Venezuelan attitude to organisation, to planning. It tells me our political leaders and political commentators are not just populist but are as intellectually lazy as it can get – to put it very mildly.

  16. There are three different ways of looking at what constitutes a subsidy and .consequenly at what level the new price of gasoline should be set .
    1. at a level where the actual costs of suplying it to the local market are covered, excluding the royalties (30%) payable on the crude used to produce it, which in effect continue to be paid and subsidized by Pdvsa .
    2.- at the cost of supplying it assuming an optimal refinery operation which does not need to import very expensive gasoline or gasoline components from abroad but including the royalties (30% of international market price) of the crude used to produce it .
    3.- the opportunity cost of that gasoline were it to be sold to international markets .(i.e. the revenue it would bring if sold in the international market)

    Each criteria would carry very different results . Cant understand why people talking about the change in gasoline prices donst consider this issue on how do we identify the subsidies that we want elliminated .

    Also the issue cannot be understood unless we take into account the whole picture of a sinking economy and the large number of subsidies which are pouring out of the public finances causing it to sink.

    If you have a ship thats sinking from 10 holes pouring water into her hull and one of those holes is metaphorically the subsidized price of gasoline ,then of course its commendable to staunch and close that hole, but on the whole its a useless and meaningless gesture if you dont do anything about the other 9 wholes . So the price of gasoline issue cannot be viewed in isolation , it must be viewed looking at all the subsidies that are bringing the economy down. including the exchange rate subsidy , the subsidy to the Petrocaribe countries , etc.

  17. From today’s El Universal the always brilliant Jose Antonio España
    “es mentira que esta regalada la gasolina, lo que esta regalando el Gobierno, es el dinero de los venezolanos a otros países y el resto está mal invertido y solo hay despilfarro y corrupción”
    But gas, nooooo, gas is not given away for free, you have to give money to el bombero, so technically it’s not free, am I right?


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