Even with gas at 4¢ per litre, Venezuelans still complain

http://www.theglobeandmail.com/servlet/ArticleNews/TPStory/LAC/20051031/VENEZUELAGAS31/TPInternational/Americas

CARACAS -- Dennis Savicke pulls his white 1982 Ford truck into a Caracas gas station and tops up its two tanks to their 120-litre capacity. The price: 6,000 bolivars, or $3.29.

While the rest of the world complains about soaring gasoline prices, Venezuela has a different problem: gasoline is almost free and its price is dropping.

"It seems cheap to you," Mr. Savicke, a delivery man, told a reporter after filling up. "But it's expensive for us. We have lots of petroleum here, so how could they raise the price? "

Here in the world's fifth-largest petroleum exporter, the government keeps the retail price of gasoline fixed at 70 bolivars a litre for regular gasoline, and 97 for premium. With inflation dropping the bolivar's value to about 1,800 to the Canadian dollar, pump prices have fallen to as low as four cents a litre

But the subsidy worsens air pollution, while costing the government billions of dollars that it could earn by exporting gasoline at world prices. It feeds horrendous traffic jams that clog streets with gas-guzzling sport-utility vehicles and decades-old wrecks, many of which stream trails of exhaust because Venezuela enforces no car-pollution laws. It is also fuelling a smuggling industry to Brazil, Colombia and the Caribbean islands.

The subsidy "is a crime," said Jose Moya, president of the environmental organization Forja.

It is popular, however, with both the rich, who accuse populist President Hugo Chavez of squandering money, and with the poor, who fear an increase in bus fares.

In recent months, many street merchants have purchased portable generators, adding more pollution and entrenching the subsidy even further. Four months ago, the city's electric company cracked down on the theft of current, so Gustavo Ceja bought a generator to power the stereo he uses to test the bootleg compact discs he sells. Running the generator all day costs him about seven cents, he said.

"If this were a developed country, then we could pay a dollar a litre for gas," he said. "But here, there are many poor people."

In border areas of Colombia, gas stations collect dust while the roads to Venezuela are lined with people offering plastic jugs of smuggled gasoline. On the Venezuelan side, gas stations' supplies are rationed.

That has not stopped drivers of decades-old cars outfitted with huge tanks -- and often extra ones in the back seat and trunk -- from driving back and forth across the border, filling up with Venezuelan gas and selling it at a huge profit in Colombia. The smuggling costs Venezuela hundreds of thousands of dollars a year and helps finance Colombia's outlawed right-wing paramilitary forces.

Although gasoline has always been cheap in Venezuela, previous governments raised the price periodically. Upon taking office in 1999, however, Mr. Chavez froze retail gas prices. Since then, double-digit inflation has caused the price of everything else to soar so that today a litre of gas costs less than a single photocopy and a gallon sells for the price of a hen's egg. But even though the subsidy gobbles up money that could be spent on schools, hospitals or police, few are calling for higher gasoline prices.

"Gasoline should be cheaper," said a grinning Jose Gregorio Baptista, a lawyer who was filling up his Ford Explorer in the BP gas station. "The government just spends its money on things it shouldn't."

Many say the subsidy contradicts the principles of Mr. Chavez's "revolution for the poor" because the car-owning upper classes receive a disproportionate amount of the savings. However, gas-station owners are about the only ones complaining.

"The government says that selling the gas cheaply helps the poor, but the rich are the ones who have cars. They have three or four cars, and the poor people walk," gas-station owner Francisco Sosa said.

"Here, gasoline is cheaper than water."

This is crazy. Venezuela has so much oil, and they are fighting capitalism with it! The country is so oil rich that gassing up the car is of no concern to even the poorest citizens--I just spent $15 to go 90 miles. The country is still poor, because of the crazy black market shit goin' down, like selling bootleg CDs and selling gas in Columbia.

Let's say Venezuela really gets the ball rolling against a capitalist oil business. Given the rise in consumption in India and China, a new economic philosophy might prevail. What does this mean for our way of life?

Am I the only one who forsees a socialist oil rich company with a man like Chavez in power as a recipe for disaster?

what we should do?

Nope the whole educated world does. But who can argue against someone who "does it all for the working class". That would be so bourgeoise.

He does it all for the working class--oh yeah, and to turn all of South America into Cuba with money. Soon enough Washington and Caracas are going to start making moves, and a new Cold War will begin.

Not even close. SA doesn't have the educated population like the Soviet's did. They don't have enough oil to make a major difference anyway.

All he will do is turn it into a police state, like all marxists inevitably do.

According to Fortune magazine, Venezuela is our number one exporter of petroleum. The same article says they are trading oil to Cuba in exchange for doctors. Venezuela's national oil company became SERIOUSLY nationalized after the 2002 general strike, and is now a major source of revenue for what Chavez calls "the socialist revolution." Billions of dollars being pumped into infrastructure and social programs. Other South American countries will want a piece of this pie, and Chavez is looking to expand. He already has China's national oil company, Iran's national oil company, and Brazil's national oil company on board--not to mention his influence over OPEC. Considering how ingrained oil is in American society, don't you think an ideological shift in global petroleum economics poses a threat to the American way of life and standard of living?

It's Chavez that is going down, not Venezuela. It makes sense he would deal with Iran and China.... two of the worlds most oppressive regimes. His inflation is out of control and has no GDP growth outside of high oil prices. Centralized economic planning does not work.

I predict that Chavez will lose in 2006, either change the results of the voting or simply not leave and Venezula will become what all socialists dream of.. a "dictatorship for the people".

I don't think Chavez will lose the next election, but even if he does I think he will remain in power. He has the military behind him. He really is going to be a dictator--maybe a more humane dictator, but a dictator nonetheless. He will work with those oppressive regimes because it makes the United States nervous. I think the reason the US/Venezuela relationship is so tense is because Chavez isn't evil like past dictators. We can stop dealing with him, but it won't stop him. And Exxon will lose a lot of money.

Obviously Venezuela's oil will run out one day, but three years after the strike that shut down oil production the national oil company is on pace to make $75 billion in 2005. The way Chavez sees it, he can make another $30 billion dollars off of Exxon, to fund his social programs by raising taxes and royalties on Venezuela's petroleum. In 2004 the per capita GDP of Venezuela was $5,800. He understands his people are poor, and what the country has to fight poorness with is oil. It won't make them rich, but with Chavez yammerin' on about social programs, it'll at least give him some measurable progress on something within his regime. But it's not like Exxon is going to give up $30 billion just because some leader says so, and with the US gov't being run by business people anything is possible.

Plus with a South American socialist movement, we might not be able to prop up the governments and drug black markets could explode. The war on drugs, which goes to keep S.A. poor, will be lost and we will lose control of a lot of our interests. [/i]

Would I come out on top if I drove to Venezuela in order to save $2.66 a gallon when I fill up my truck?

Brilliant!

I think you and I differ on our opinion of successful social programs. It's sounds to me like Chavez basically setup a giant oil-funded public employment program for the lowest (and most populous) class. He "liberated" some farm land and will put them to work, for the government, creating an economic dependancy on his government for a majority of population. With this, he locks in their votes ( he used electronic voting machines that had TWO WAY writable memoery in the last election ).

He wisely sees that the US is too full of uneducated gangsta-thugs and baby mommas to pose a threat to his future, so he aligns himself with fellow oppressive "elected" dictatorships in China and Iran. The enemy of my enemy, and so on. This prevents military action against him, because the UN is useless and he US is too divided and dependant and China.

The problem is that he cannot control his borders, narco-terror will become an issue as you said, and socialism always leads to communism. Communism and oil exports don't jive that well.

Clearly the United States must invade Venezuela immediately and remove this man from power.

I don't belive I have suggested such a thing. I think it's up to the people to recognize their fate and change what they can now.*


*Unless the Supreme Court overrules them.

i dont doubt

But of course, if any course of action were to be taken, it would firstly be in order to plunder their oil.

Isn't Canada our largest oil supplier? Something like over half of all of our imports are from Canada I thought, then Venezuela, then Saudi Arabia.

I agree with most of what you are saying--although I do believe the Venezuelan elections have more legitimacy, due to their being monitored by Jimmy Carter's organization and all (let's get a little international monitoring here, eh?)--BUT...I think Chavez DOES see the US as a threat, and because of this, and because he has oil, Chavez is trying to create a successful Communist revolution, as far as oil is concerned, because taking away control of the oil industry can change the scope of world power alignment and make the American way of life VERY difficult...think of how much inflation would rise here if an emboldened Chinese government un-tied the value of the Yuan to the dollar.

Chavez is trying to wrest US influence from oil by creating new Communist markets that OPEC can use to bargain with and shift global economic flows in their favor...Chavez may think of himself as a new Lenin, and I think he's slowly pushing for a new revolution. He's not US friendly, and there are a lot of people against US backed governments down there...these kinds of things have happened before. They led to present day China, the Soviet Union, Cuba...even though the population of the US is somewhat complacent and the cold war is over, there are plenty of people that are aware of the threats communism poses to the way of life in this country. Given the business nature of politics in the US, I think this makes Chavez very nervous, and he is looking for allies against the United States...I could be wrong, but we have to at least consider this.



According to "Oil's New Mr. Big," an article in Fortune Magazine, the top five are Venezuela, Canada, Mexico, Saudi Arabia, Nigeria. I've also seen somewhere that Canada purchases most of the oil it uses from Venezuela, but they sell the oil they pump into the United States, based on the distance between their resources and their refineries. The oil industry is the craziest shit in the world.

That seems like a resonable assesment. I hope that like China, the USSR, and soon Cuba, Venezuala will see that you can have the best of everything (both capitalist and socialist).*

*Like Norway.

http://www.eia.doe.gov/emeu/cabs/usa.html