Archive for December 18th, 2013

The Venezuelan Opposition Blunders Criticizing The Gasoline Price Increase

December 18, 2013

gas49.76 Liters (13 gallons) for Bs. 3.5 , that is US$ 0.55 at the official rate for a full tank, or US$ 0.055 at the parallel exchange rate. (4.2 cents per gallon at the official rate or 0.42 cents per gallon at the parallel rate)

I think the opposition is making a huge blunder criticizing the gasoline price increase and it shows its inability to evaluate how it reacts first before going forward. In the particular case of the gasoline price increase, which has now been opposed by at least, Henrique Capriles, Julio Borges, Leopoldo Lopez (The only winner in the recent election) and Maria Corina Machado, I think they should have waited for the full proposal before jumping the gun, rather than reacting viscerally to the announcement.

First of all, the announcement is incomplete, we don’t know what the new price will be and who it will apply to. The Vice-President suggested that it will not apply to public transportation and freight trucks, but we don’t know yet. Moreover, while the President of PDVSA has suggested that the new price for a liter of gasoline will be Bs. 2.8, there has been no formal announcement, what he had was a slide that showed at what price PDVSA breaks even in selling gasoline.

Second, if the opposition should believe in something is in that the current price is simply absurd (see picture above) and should be careful in opposing it today, when it may have to be in favor of it in a few years. It makes no sense to sell gasoline at a loss, it makes no sense to oppose the price increase if you believe in having a rational economic system and that the subsidizing of everything has to stop, particularly such a regressive subsidy.

Third, tying it to the Cuban or Petrocaribe subsidy makes it a very complex issue that most people will not understand and it is not true that the gasoline¬† given to these countries is “free” either, as most of them have suggested. Petrocaribe countries pay 50% within 60 days of delivery and the remainder with a loan that makes no sense, but that is a different matter. And while Cuba does not pay with money, it pays the gasoline with services. These services are paid at absurd prices, yes, but again, if you start lying and saying half-truths you are behaving the same way we criticize the Government for behaving.

Fourth, the Petrocaribe subsidy has actually been reduced in 2013, as clearly explained in this article in El Nacional, so the Government is actually doing something about that too. So, check your facts before you speak should be an important rule.

And finally, the opposition should be careful with anything proposed by a Government that has been so clever at manipulating public opinion and getting its way. While everyone thinks back to El Caracazo when talking about gasoline price increases and its consequences, people seem to forget that a very unpopular President, Rafael Caldera, actually increased the price of gas by about 800% in 1996, with little political consequence, as it sold the idea well and people understood it was needed. I don’t believe for a moment that the Government is being naive in proposing this price increase. They must have polls that show that people would support it and are ready to make the subject even more popular. Even to the point of having a referendum on the subject and beating the opposition (again!)

So, I think the statements made were wrong. The opposition should have waited for the details and oppose the details, but not the very logical and sensible gasoline price increase. Not doing so is simply cheap politics of the worst kind. The same way, it should say it backs it, but it also backs better terms for Venezuelan in the Petrocaribe and Cuba deals.

What the opposition is showing is that it has no solid proposal of any kind, it just reacts and opposes what the Government says. Maybe that is part of the reason why a large segment of the population does not trust it.