Government does something not-crazy, scrambles to hide it

Singling out gochos for adjustment.
Singling out gochos for adjustment.
Singling out gochos for adjustment.

Did you hear? Venezuela raised gasoline prices yesterday. Not nationwide, of course: just locally, in areas near the Colombian border where gasoline smuggling had become completely rampant. Pumps nearest the border are now charging Bs.83 for a liter of gas, while pumps slightly further away are charging Bs.50.

If you know anything about Venezuela you know there’s no straightforward answer to the question of how much that is in dollars. If you go by the SIMADI rate, it comes to about $1.58/gallon right near the border and 95 US cents a gallon further away – or either way less than that (using the black market rate) or way more than that (using the SICAD or official rates.)

One thing’s for sure: it’s substantially above the previous price (which, for all intents and purposes, was zero.)

The decision, although very partial constitutes, nonetheless, an extremely rare instance of movement-in-the-direction-sanity in economic governance. Which, I suppose, explains why it was never announced. It was just sprung on users like that, from one day to the next, with no discussion, no acknowledgement, not even a press release.

It’s grimly funny, really. When – exceptionally – the government does something that is not outright crazy, they’re ashamed of it! They work to hide it. And so they manage to take something that ought to have been a positive signal and turn it into just the Nth reminder of how screwed we are.

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  1. Maybe this is a scam by local gas station staff to cream off some of the value? You don’t have to be unemployed to do bachequeria.

  2. It seems that the crude price will hit below the $50 mark again soon… Jesus Christ! They have no other option.

    “There’s a storm coming, Mr. Maduro. You and your friends better batten down the hatches, because when it hits, you’re all gonna wonder how you ever thought you could live so large and leave so little for the rest of us.”

    • Venezuelan crude today is about $44/bbl, the usual $7 below WTI ($51 today); the DT/Ven. Govt. figure always overstates the Ven. spot price.

      • On top of that, foreign reserves are already at the “lowest point since 2003.” mayday!!!

        Calling it now: Cabello will pull a Rudolph Hess and fly overnight to Miami on a PDVSA plane with all his family, haha!

  3. Well, if you’re smart you’ll get a full tank of premium gas at the most expensive pump. That’s the Logic.

    When are they running out of Beer?

  4. There is an elasticity factor here. If the price of gasoline reaches a point of such dramatic difference within a given region, then it may provide an ‘incentive’ to make a two hour trip down the highway to fill-up with the cheaper gasoline. Venezuela will quickly acquire another non-productive employment opportunity for its people, yet another new arbitrage market. . It is likely that you’re gonna see all kinds of new motor traffic moving east to fill-up at those gas stations, then moving west to sell it at a higher price. A new incentive! One can only place fist-to-jowl and admire the Venezuelan’s ability to quickly adapt to changing economic circumstances…..

  5. A handful of gas stations, screw the Gochos (they wont vote for the Govt., anyway), wont even dent the large-scale smuggling operations there, much as the retail chip hasn’t done on Maracaibo borders.

  6. Now that the age of travel by horse and carriage has passed, the localized nature of the measure is still a little embarassing. …

    • Nobody would call this good governance. But it’s a matter of perspective. When the patient has been loudly protesting that he’s a chicken for years and years, you count it as progress when he decides to claim he’s Napoleon, instead.

        • Its ironic that the regime is experiencing its biggest failures due to the opposition , It could have handle the worsening eonomic financial situation more competently by just acting rationally on a number of fronts , for example raising the price of gazoline or using a more realistic exchange rate , instead its cowardly fear of taking measure that might increase the popularity of the opposition is forcing it into absurd policies and decisions that only make its situation worse and worse. The opposition is making the government topple itself without doint nothing . The greatest enemy of the regime is its fear of the opposition not anything that the opposition does by itself.

          • to paraphrase Napoleon, aka in this case, the MUD: “When the enemy is making a false movement we must take good care not to interrupt him.”

  7. Quico, if the ogvernment claims it is a chicken, I am afraid that the people actually say that they would stop believing the government is not a chicken, save for they need the eggs.

  8. Does anyone know the percentage of people with cancer in Venezuela?
    Recently a few people I know died from it and some have been diagnosed with it.
    Many roofs are made from asbestos which I know is a known cancer causing material plus all the fumes from refineries that are not maintained could contribute to a higher level of cases.
    There are no official numbers for this so maybe someone knows something or a link to a site would be welcome. Thanks.


    Heheheh, I had to say it, gwehehehe 😛

    And MUD’ll keep silent shut about this, ’cause you know, it’s not fair to use it as a proof of the chaburro hypocrisy and the fallacy that’s the supossed reason for the so-called caracazo.

  10. Francisco, I remember a trip to Colombia from Zulia, via Sur del Lago (Ojeda, Agua Viva, Caja Seca, El Vigia, Coloncito, Orope, Puerto Santander, Cúcuta) and returning via Machiques (Cúcuta, Pto Santander, Orope, Machiques Maracaibo, Ojeda); I fill my car’s tank in km 15, a gas station near PDVSA’s “llenadero” (Gas distribution plant) in El Vigia; my inlaws didn’t. They need to refill their car’s tank in a gas station in Venezuela, near the border, and I don`t remember how much they pay, but was WAY MORE the amount you typically pay because that station charges an “international price” (I refill mine near Machiques). That was about 8 years ago.

  11. The measure may hazzle the small time smuuggler , the guy taking a 100 liters or so under his car accross the border but it will only tickle the operations of the big time smugglers , the organized GNB protected smugglers routinely taking truck loads of gasoline thru the frontier. !!

  12. So, it appears they have decided to raise the price to rational levels. But, instead of raising it incrementally over time, they are going to raise it incrementally by geography. The internal gasoline price border will gradually sweep eastward. That way, they can deal with any resulting unrest, one city at a time. It is actually a pretty clever concept.

    • And what will happen to the added income?

      1/ Stolen among local “officials”
      2/ Stolen by central government
      3/ Stolen but re-applied for brain-washing elections propaganda
      4/ All of the above

      • ¿De dónde crees que sale la plata para armar a los malandros, meterse perico y pagar las tetas de las barraganas, chamo?

  13. Now what would the consequences be if there’s a substantial, generalized gas increase?

    At the micro level, probably not much: people will start using their cars less and for shorter distances. Besides crime, and lack of parts, it’s just another reason to drive even less. Cuba had no problem, look at their awesome vintage cars from the 50’s!

    Public transportation costs will obviously rise in direct correlation. But the Dictatorship will impede that industry to raise their fares (buses, taxis, etc). So they will get pissed off. They’ll probably split the damage with the repressed consumers, a few Union leader bribes or threats, listo el pollo.

    Business transportation costs will also rise, of course, though Diesel would probably still be almost free. Cost of most products goes up, more inflation, and escasez when regulated. Great. Anything to piss people off some more, see if the millions of Chavistas still out there wake up one day.


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