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.

50 Responses to “The Venezuelan Opposition Blunders Criticizing The Gasoline Price Increase”

  1. moctavio Says:

    The total is higher if you go to international prices, more like US$ 22 billion. Venezuelan uses 800,000 barrels of gasoline a day. A barrel is 42 gallons or 147 dollars at US$ 3.5 per gallon, so that we use 43 billion dollars worth of gas a year. But, US gas has lots of taxes, about 53 cents in Florida, plus there is shipping and transportation and refining. I understand 35% goes in that, so that the subsidy is like US$ 27 billion, a lot of money for a poor country. But since gas is free, there is no effort to save whatsoever. Another achievement of the stupid revolution,

  2. Ira Says:

    I read that the subsidies are valued at something $12 billion annually. Is that correct?

    If so, two things come to mind:

    First, one would assume that total is calculated on an average gas price, based on worldwide prices. If so, with the small proposed increased, how much is VZ actually going to gain by it? It will hardly make a dent.

    Second, $12 billion seems like a HELL of a lot of money given VZ’s modest population. If you do the math, even counting every single Venezuelan as a customer, isn’t that an awful lot of gas per person?

  3. Larry Says:

    THe only explanation for the use of the Cubana VIP Ilyushin is cost. The Cubans need help with the costs. The Airbus cost millions annually. They can save lots of money by using the Cubana but it sends the message that Cuba is in charge.

    • m_astera Says:

      Because Cuba IS in charge. Of both the government and the looting. I would imagine Maduro’s bodyguards are all Cubans inherited from Chavez. If he dared make a move without an OK from Cuba he would be asking for an accident.

  4. Larry Says:

    Also the just announced deal with Dornier is a military deal. The Americans need to get busy and serious with due diligence and the embargo lest them pull another ‘Navantia’

  5. Larry Says:

    Airbus update: Nick recently said FAV0001 was going to Conviasa. She was at Sabena-technics in Bordeaux, France between March and September. She spent the summer outside. No interior work was done. They flew her out days before Maduro publicly scapegoated Airbus about damage. There was no mention of the damage and my two sources in Bordeaux don’t know.

    Maduro was at Airbus in July negotiating a package for military tankers, military helicopters, civilian aircraft and another bigger VIP bird. Then came Air France.

    Me thinks Maduro wants a bigger bird as the enourages are quite large requiring two or three aircraft.

    No word on the Airbus deal which I can say is being stopped. They will not get the military package.

  6. Bob Says:

    Oi oi oi !!! Stop ‘disrespecting’ Mugabe. OK he is still in power and that is without the oil. Venezuela could not hold on to a democracy with oil. Every mention of Mugabe highlights the fact that as Venezuelans we are closer to Haiti than………anywhere normal I suppose.

    Even the Negritos of Trinidad have toilet paper !! In fact all the
    Negrito islands have toilet paper.

    To move forward we must stop intellectualising our country and people. We are backward, very backward. From complaints about airline tickets to the price of fuel. Oh me I despair. Of course it is bloody stupid to give away fuel and as for airline tickets who says we have the right to fly ? Do the Haitians or indeed the Zimbabweans have that right ? Nope, so why us ?

    What do we produce, what do we export apart from oil ? What have we given to the world ? Absolutely nothing but we expect everything.

    Venezuela always has been a country where people take. From the Spanish heroic Conquistadores, the oil-stealing Gringos and failed Europeans , (normally Portuguese, Spanish and Italian hillside peasant stock fleeing their pauper status countries post ww2) intent on filling their pockets by means foul or fair. And they multiplied, even calling theirselves white ! And after having educated their low quality genes by purchasing a degree their world was nearly complete. The problem is they thought they were refined intellectual characters fit to govern when in reality they would have had difficult herding sheep. And those pocket filling Spanish immigrants and their inverted intellectual offspring,and the likes, are those who set us on our present doomed course.

    And now they wave their passports, the EU ones, and return to the comfort of home leaving the Venezuelans with the consequence of an attack by Europes equivelant to the Mugabe tribe.

    Merry Christmas.

  7. Morpheous Says:

    The debate here seems to underlies that we have a trustful CNE. But the problem is that no matter what the opposition does or does not, the CNE and the government will never leave the power by elections. It will happen like in Zimbabwe that even having the second largest hyperinflation in the world history, Mugabe is still in power.

    I not only agree with a rise in the price of gasoline but also moving as fast as possible to lifting most price controls including the exchange rate controls along with all necessary policies to protect the poor. There will be more inflation in the short run; but if all policies are kept consistent, the inflation can be brought down in one or two years to one digit. I am sure Maduro will never do this but I also agree that Capriles would not either. And don’t tell me I am a dreamer cause I can assure you that if you don’t act aggressively against inflation and external imbalances, then you are killing the baby before birth. And the more waiting time to do what you have to do, the more pain when you be force to do it.

  8. moses Says:

    There are several threads in Noticiero Digital about the gasoline price, in this one there is an estimate of cost per Km: 0,011 Bs / Km

    In other words you can travel 100 Kms with 1.10 Bs or 62 miles with $ 0.0017 (@6.3 Bs / $).

    The impact in the cost per Km for a truck or bus unless you raise by 100 times is nil . . .

  9. Ira Says:

    If opposing price increases in the past has helped Chavismo, why would the opposition opposing it now be a bad thing? In the politics game, it makes total sense–even if it doesn’t make sense economically.

    And let’s face it—it hasn’t exactly been sound economic policy that’s kept Chavismo in power for 14 years.

    What’s more, while I certainly understand the large amount of revenues to be gained by raising domestic prices, that sure ain’t gonna fix this messed up system by itself. And if they HAD a viable system, the lowest fuel prices possible drive economic growth.

    Finally, as Alaskans receive (or at least used to receive; not sure about now) an annual stipend derived from oil revenue…as some Arab citizens do…it’s a pretty straightforward way of spreading the wealth.

    Of course, since VZ has minimal refining capacity and it costs the government more to purchase refined product than they’re selling it for, it IS kind of a boner equation, but should VZ ever get serious about refining capacity under a responsible leadership, I still think using oil as a national subsidy for the people isn’t such a bad thing.

    • It does not spread the wealth as those that benefit the most from the gasoline subsidy are the wealthy who have cars, not the poor. It is a pretty regressive subsidy in the end.

      • Ira Says:

        Aren’t there many who live off the grid, and use generators on an as-needed basis?

        Or independent workers who use gas-supplied tools?

        Taxi drivers? Delivery people? Anyone who uses a personal vehicle for his or her profession?

        One can hardly claim that only the wealthy own cars. (That kind of thinking is Chavismo!) And any bolivar that doesn’t go into PDVSA’s coffers is another bolivar that goes into the economy.

        • moctavio Says:

          The subsidy is quite regressive, studies show that the top part of the population uses something like as much as twice the gas as the poor. A person driving a car to work uses much less than the person that takes the subway or the bus to work.

    • Kepler Says:

      On top of what Miguel said, at this point even half the population is starting to realise petrol costs something and it is being given away.
      Perceptions are not static, even with this issue in Venezuela…and the oppo might just be arriving too late.

  10. Island Canuck Says:

    Reporte Confidencial ‏@RConfidencial 19m
    Dice @josegrasso: BCV suspendió la rueda de prensa prevista para hoy para dar la inflación de Nov. por un tema de cambio de agenda

    Ha,, ha
    It must be a tremendo numero.
    I wonder how much infighting is going on between the number crunchers & the politicos.

    • Kepler Says:

      Tú eres un canadiense perverso y mal pensado. Seguro que lo que pasó fue que Eudomar Tovar tenía diarrea.

    • Island Canuck Says:

      Ha, ha.

      There’s another rumour floating that they’ve replaced the president of the BCV, Wonder why?

      • Kepler Says:

        Hard to believe. After such a short period? It would be just so big the admission of failure and chaos! (well, not that they might care so much)

  11. Kepler Says:

    To those who still defend Borges’ attitude of only criticizing:
    It is WRONG for more reasons than you believe.

    It is not just that it is a bad economic policy, simply put.
    It is that it is no longer supported by probably more than half the population right now. People do CHANGE and they have been changing little by little
    and the government will see to it that they change more. And if more than half the population now thinks a petrol price is needed and the government is treading very carefully on this, the MUD is really on a very bad stance: it shows that it can only react TOO LATE. One thing is what people thought in 1989 and another in 2000 and quite another at the end of 2013 with such a huge inflation.

    If you guys don’t see this, you need to get more in touch with José Rodríguez from Calabozo or Punto Fijo.

    So: even politically, the MUD is again on the wrong track.

    Also politically: it is completely unbelievable that they say this. They also do not go into any depths. And they do not give full proposals.

    Someone here is saying that if we say too much Chavismo will copy the plan and lo and behold, implement it! And the most important thing is for them to go.

    Wait a moment: why do we want them to go? Because we want to replace them or because we want Venezuela to have a good government?
    If they really were to implement our plans: wouldn’t they be producing a better government?

    Do you prefer Venezuela to rot than for your clan to lose power forever?

    If you might think: oh, but they might implement what suits them and other things like freedom will be kept away.

    This is wrong for two reasons. First: economic develop can lead to more pressure from the middle class.

    Secondly: if we did do our homework, we would talk about our plans in such a way that we tell people “this is what we demand the current government to implement because of this and that, we want it to take over these ideas, even if they say these are their ideas”…which they won’t.

    One thing needs to be clear: among the ideas we need to include in our programme are such things as real public debate, separation of powers, strong accountability mechanisms, etc. The tragic thing is that most politicos in Venezuela do not want to talk about those issues because, after all, they are almost all a bunch of feudal lords…some with some superficial layer of pseudo-capitalist ideology, some with some superficial layer of pseudo-socialism or whatever…but ultimately all are people who just want to be in power and with the money.

    • Charlie Says:

      Agree with you 100%. Ever since I came back to Venezuela, I’ve been waiting to hear something, anything concrete coming from the opposition …… and still waiting.

  12. César Says:

    I think this finally proves that the main characters at the MUD are basically a bunch of bate quebrados. I’m sorry for being so blunt, but among Venezuela’s most urgent issues, the gasoline price is probably the one that is easiest to understand and explain, and they blew it. I can’t trust them. They are a necessary evil in that they oppose Chavismo, but that’s about their only merit. In many, if not all, issues the MUD obviously has better arguments than Chavismo, but is that really so difficult? Is that merit enough? We need a political opposition with the power of arguments, convictions, and ideas, not just a capacity to react.

    • TV Says:

      Well, Chavizmo rose on the back of a fuel price hike attempt. Chavizmo needs to pay the political price for the increase. If that means MUD supports a wrong cause here or there, it doesn’t really change all that much. Chavizmo must die, and giving lip service to a wrong cause really changes nothing.

  13. Alex Says:

    I’ll bet a few bucks that they will not dare to raise it to 2.8 bsf. They’ll do so a liitle, maybe up to .200 from .08 , something that will not affect people too much.

  14. metodex Says:

    Increasing prices is the equivalent of them getting more money,and them getting more money means they will stay in power longer and get more trips to miami.

    What,you think this is going to help US?The people? Los de a pie?
    As Leopoldo Lopez said, we can’t keep fooling ourselves,we need a change of government, we don’t need them to change their policies.They gotta get out

  15. Eduardo Says:

    Sorry for off-topic, Devil.

    Have you read Gaceta 6117 (04-Dic-2013), page 5?

    It seems that Maduro has lifted the ban on exchanging dollars, for natural persons.

    No more money my friend?

  16. Morpheous Says:

    “What the opposition is showing is that it has no solid proposal of any kind, it just reacts and opposes what the Government says.”

    I agree but, what should be the “solid proposal”?

    For example, the opposition could look at other successful oil exporter countries, such as Norway or Canada, and propose a similar model (adapted) for Venezuela’s development. They could keep secret that they are learning from other country’s development model. But there is problem: if the proposal is disclosed, the government could actually implement the model and then what?…

  17. Tomate Says:

    I completely agree with you Octavio. It shows absolutely no backbone, no plan just playing childish politics. They have to stand for something beyond been against Chavismo.

  18. Island Canuck Says:

    Inflation % guestimate will be announced tomorrow.
    Any guesses?

  19. JB Lenoir Says:

    I stopped blogging months ago with a final comment: MUD is flat. There’s no one in the oppo that truly excites the masses, no one at all. Capriles, Lopez, Maria Corina etc do not represent anyone nationally except their own very narrow followings/interests. Capriles was the best the MUD has been able to field to date, and he’s strictly minor-league, not ready for prime time big league play. They’ve never had a coherent program; it’s always been a no-win us vs them diatribe centered on getting rid of Chavez (now Maduro) at any cost. The chavistas at the top are crooks, thugs, beasts, whatever one wants to describe them as being…but they’re more consistent/coherent than the oppo ever has been. The regime also has been remarkably successful at infiltrating and co-opting the MUD, a point my late dear friend Eric Ekvall made repeatedly until he was ostracized politically by those imbeciles in the MUD. The pueblo isn’t stupid. They know when they’re being sold a pig in a poke, which sadly has been the MUD’s style since way back when. The only oppo figure who gets it right is Diego Arria, who was sidelined very early by the MUD. But Diego is too long in the tooth and too tainted by his own historical sins of years long gone when CAP jumped over puddles and chanted “Manos a la Obra” with his corrupt associates like the Tinocos, Cisneros and Vargas clans-gangs that to this day continue sucking the wealth out of Venezuela like vampire bats feed on cattle in the night. PS. Interesting that most of the folks still blogging (and commenting) about Venezuela on this and a few other well-known blogs long ago decamped to other parts of the world….

    • Rip rjd Says:

      Caracas Gringo is alive!?!? I thought you were dead or imprisoned 🙂

      • JB Lenoir Says:

        Still here. Yerba mala nunca muere. Still writing for a living, and enjoying my beautiful young wife and sons, learning to play guitar, reading voraciously, expanding my global blues collection, taking long walks in the woods with my beagle Buzz aka NumbNuts, and trying to remain distant from ‘la derecha’ in Venezuela and Washington/Miami, which sadly in both locales has mutated into the existential equivalent of a nasty MSRA infection….

        • JFQ Says:

          Jack, at the end of the day, Washington and Miami is where reason prevails. Don’t confuse the chusma with the good guys. There’s a lot of talent up here. And for your information, folks here don’t give a flying F about Venezuela…they are too busy with their lives here. When people need help, they come here. The latest example is Jacob Ostreicher. It was the “gusanos” Cubanos en Miami que rescataron a este senor.

      • xp Says:

        most of the folks still blogging (and commenting) about Venezuela on this and a few other well-known blogs long ago decamped to other parts of the world….

    • Roberto N Says:

      Verga Mijo! Por fin se te ve la cara!

      Couldn’t agree with you more on everything you just wrote.

      The “ting of it is, mon” how long must we wait until they get their heads out of their respective arses?

  20. moctavio Says:

    Well, I think the approach is wrong and dishonest, they should attack what needs to be attacked, this will be yet another defeat for the opposition.

  21. Jose Alfredo Gonzalez Says:

    The gasoline prices must be increased. What the opposition cannot do is to allow the government to turn, a decision that is politically “expensive”, into a political victory. They have to make the government pay the political cost and at the same time make sure they do increase the gasoline prices. Ironic? Oh yes, definitely. However if they can pull the trick that could be a double win for the opposition.

    Whether the strategy is to wait or to criticise subsidies to other countries they cannot miss the opportunity to capitalise on such unpopular measure.

    It is very tempting for the educated class to jump to conclusions on how stupid the opposition is for criticising such measure . However, the opposition reaction needs to be read on a different context. They are not targeting their attacks to win sympathies among the rational, educated and economically well versed audience. That class already supports them and will support them regardless of their position on this matter. They need to get the sympathy of the people that does not vote for them, that is a population that is largely poor and uneducated. I think the strategy should be to communicate this audience how the measure will affect them personally.

    These guys are not doing politics in Switzerland. They cannot play chess while they are in a “bolas criollas” court. What I mean is that although sometimes irritating, some political positions need to be seen from a bigger perspective.

    My 2 cents.

    • Kepler Says:

      José Alfredo,

      I think the problem is that you know Venezuela is not Switzerland and yet you do not seem to know – at least they don’t – that even José Rodríguez – the average Venezuelan – is starting to see an increase in petrol prices is necessary. If you haven’t seen it, more and more people among the poor are realising that and even if half of them haven’t, you would be surprised that half of the better off (who are a minority, anyway) are not wiser than them…and the government is and will finally produce some messages to prepare the public for this.

      So: Borges and López are AGAIN late. I would advise Borges to spend some time incognito in Maturín or Guacara. López has been a lot everywhere, but perhaps he hasn’t been listening. Things are changing.
      Will the MUD react only too late?

      As Miguel said: they didn’t wait, they didn’t have a plan.

    • O sea, no se pueden pelar ese boche!

    • sapitosetty Says:

      The key here is that the public gets the politics it demands. Until someone can go to the public and explain basic economics, the public will demand stupid stuff. That’s normal. What’s bizarre is seeing Rafael Ramírez being the one who makes economic sense and the oppos deciding that it’s their turn to delude the public.

  22. moctavio Says:

    I agree, in the end they want to increase gas more in order to devalue less. Those expecting pragmatism are wrong, I think this is it, the adjustment will be a meek increase in the price of gas, and a timid devaluation.

  23. Tom ODonnell Says:

    Very well said. Though, not merely a ‘blunder” …

    With this knee-jerk opposition to a rise in gas prices, the opposition (once again, but now more clearly) reveals its crisis of a lack of any consistent, independent political program of its own.

    It is difficult to imagine the low level of analysis now being offered by the opposition. They appear ideologically and analytically bankrupt.

    However, you made a key observation as well about officialismo in your previous post: They are also ideologically stuck as to their ability to imagine solutions to the economic crisis of Chavismo that go beyond habitual chavismo.

    Absent some upheaval, some big shock, one should not expect much of a transformation from officialismo, even with the upcoming respite of two years without elections.

    This is a very unusual situation.

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