“You will never win this war when there is so much money to be made. Never”
Jhon Popeye Velasquez alias “Marino” in an interview before he was released.
To those that watched Escobar, El Patron del Mal, the character Marino is one of the worst guys in the book and series. It turns out that this week he was freed from jail after serving twenty eyars and has been in the press quite a bit. The sentence above hit me, because that is one of the things that I fear may happen in Venezuela: there is so much money to be made, that those trying to change the Government may never be able to. While “Marino” was referring to the drug war, I am referring to all of the corrupt businesses allowed and nurtured by the revolution. Everything in the rveolution has been turned into some form of business or arbitrage. From drugs, to Cadivi, to Fonden, to gas. Thus, do you really think those in control are going to give up these rackets so easily?
I don’t.
The basic question I want to answer is: How much money or profit are we talking about?
In this post I make a very rough estimate of one the biggest businesses (Billion dollar plus) where the boliburgoise and Government officials, civilians or not, have gotten rich, filthy rich. I make many assumptions, attempting in the best case to be under the correct amount, rather than over. I will try to make a series out of this. Today, gasoline
1) The gasoline racket.
When did it become such a big business to take gasoline out of Venezuela? Since Chavez became President in 1998, the price has been frozen. When he got to power, a liter of gas was about Bs. 90 (0.09 of today’s Bolivars) and a dollar was about Bs. 600 (Bs. 0.6 of Bolivares Fuerte). Even at that level it was a good deal to send gas to Colombia. But it did not become such an organized activity until the difference was so large, that the cost of gas was irrelevant. Let’s say a factor of 50, that is, when the parallel market rate became Bs. 5. I am going to assume that this is when the racket began to become massive. We are talking around 2007. And I assume it reached the current massification when the factor became 100. This happened in 2012.
The first question is what is the current number for barrels of gasoline extracted per day. Ramirez says 100,000 barrels a day. Colombia says 55,000 alone to that country. I will assume, the latter and add 10,000 a day to Brazil and 10,000 a day each to Guyana and Caribbean islands. Total today 75,000 barrels a day. I will also assume that when it all began in 2007, about 10,000 barrels a day was being smuggled and from 2007-2011, take the slope between 10,000 and 75,000 reached in Jan. 2012 This is all very conservative.
Now, the next question is: When they say so many barrels a day, are they talking about barrels of crude? Because you only get about 19 gallons of gasoline from a barrel of crude which holds 44 gallons of crude. I am also assuming this interpretation is correct. it’s “only” a factor of almost 2.
So, here I am holding one barrel which was free, given the approximations I already made. The middleman in Colombia, Guyana, the Caribbean islands and Brazil have to make something. So, I will assume that each gallon is sold cheap for about $3, so that my barrel is worth US$ 57. Nice profit. Before we discuss who gets it, let’s calculate what this means in one year for 75,000 barrels.
It is US$ 1.56 billion per year. Or from 2007 to 2013 US$ 8.426 billion in profit.
Now, I would bet the “bachaqueros” do a significant fraction of this business. But they have to pay the military. The question is how much is the more “formal” business. the one that takes full trucks of gasoline to Colombia. My guess is this is about half the business. Thus, assume the “bachaqueros” have to spend one third of their profits in bribes and that “you know who” takes about 80% of the profits from the other half and you are saying the ones that control the gasoline racket have pocketed about US$ 4.67 billion.
Double it if they are talking about barrels of gasoline…
Nice racket! But there are bigger ones! More, as I have time (but going on vacation)…Cadivi, Bonds, Drugs, Foreign Exchange
The Devil's Excrement 