We’ll get started with our Down The Rabbit Hole segment in a few but first…Reuters reports that Venezuela oil exports for 2022 averaged 616,540 bpd (barrels per day), down 2.5% from 2021 and slightly below 2020 levels. This validates our view, and that of many oil analysts, that PDVSA (Venezuela government-owned oil company) won’t see a significant increase in oil production any time soon and that Venezuela, for all intents and purposes, has no spare capacity to ship a meaningful amount of oil to the US. (Remember, Maduro’s prediction for 2022 production was 2 million bpd)

 We’ve covered the fact that Venezuela needs a minimum of 600,000 bpd to cover obligations to China , Cuba, and domestic consumption. That puts Venezuela’s spare capacity at about 16,540 bpd which is effectively nothing. (and that’s if they don’t actually want to sell oil for cash, which they don’t get from their 600K bpd in obligations)

 We have been hearing about all the things Venezuela was going to do to increase oil production (and other sectors as well) for quite a while, most notably all the assistance they would get from Maduro’s new BFFs in Iran.For the last couple of years we’ve had a non-stop drumbeat of propaganda from the Maduro regime … “Venezuela signs historic, strategic agreements with Iran”… “Venezuela signs contract with Iran to rebuild oil infrastructure”, etc.

 Over that time we’ve repeatedly reminded you that responsible oil analysts say Venezuela will need $10 billion a year for at least a decade to restore oil production lost under Chavismo and 21st Century Bolivarian Socialism. Now, with oil prices up in the last year and Iran doing everything it could to help the Maduro regime (which included Venezuela actually importing oil from Iran), oil production is down over the last three years, not up.

 Chevron has already said there will be no significant new investment in Venezuela for at least six months (the recent shipment to the US was from oil storage) so they won’t be the answer to Maduro’s woes and Biden’s hopes. Other oil majors don’t trust the Chavistas (a lot of companies are still trying to collect on court awards for past Chavista expropriations) so they won’t be the answer.

 Again, responsible oil analysts put Venezuela’s production cap at a Maximum Of 850,000 bpd over the next two years and that’s if everything goes well. These latest numbers show that things won’t be changing any time soon.

 Then we have Fides telling us that the recent ceasefire decree with ELN (Marxist paramilitary group) has been suspended by the Colombian government after a statement by the ELN Central Committee saying the measure was not agreed upon during negotiations in Caracas (the Maduro regime is acting as guarantor for the talks). Negotiations are scheduled to resume January 23rd. Nicolas Maduro is straddling the fence on this one. He wants to cozy up to Gustavo Petro, his new leftist/Marxist comrade and now President of Colombia but the Chavistas have a long history of enabling ELN’s criminal (terrorist?) activities.

 And in an ominous headline BNN Bloomberg announces “Venezuela Teeters Back On Hyperinflation As Prices Surge”. data from the Venezuela Financial Observatory shows the December consumer price index up 37% and annual inflation was 306%.

 Bloomberg’s “Cafe Con Leche” index (the price of a cup of cofee, which is usually pretty accurate) was up 53%. BCV (Venezuela Central Bank) hasn’t published inflation figures since October (when prices started to rise). Reminder, inflation slowed due to Venezuela’s de facto dollarization and BCV’s buying of bolivars to keep prices low using their cash reserves, which was unsustainable. Oh, and Maduro’s new foreign currency tax isn’t helping dollarization.

 Now let’s head Down The Rabbit Hole…

 Chapter 11 continued…

 …Then the Chavistas killed it! They petitioned the TSJ to set aside the results of four elections, three of which were won by oppositions MPs (members of parliament). The TSJ, which we’ll cover in detail in the next chapter, is Chavismo’s (Maduro’s) “rubber stamp”. They did their job and suspended the four MPs victory until the allegations could be properly investigated. They entered the “Limbo Land” of any anti- Chavista entity. For a variety of ever-changing reasons/rationalizations/ explanations/ whatever…nothing further was ever decided so their election was never approved by the TSJ…nor was it denied. They were prohibited from taking office but were not replaced in fresh elections…EVER!

 Without the missing MPs the opposition had an imposing majority in the National Assembly but fell short by a seat or two of the 2/3 requirement for super-majority powers. They couldn’t unilaterally oust TSJ judges nor Maduro through a recall election. When the new assembly took office the next month things would get contentious.

 The action began just before the new assembly was slated to be sworn in. The outgoing MPs (mostly Chavistas), in a last-minute preemptive strike, replaced 13 judges on the TSJ that they (Maduro) considered not sufficiently pro- Chavista even though they always ruled pro- Chavista. The good old days of Chavismo being in total control of the three main branches of government were coming to an end, at least temporarily. Maduro also issued some last-minute decrees utilizing emergency powers granted him by the outgoing assembly, perhaps fearing resistance from the new assembly.

 The games really kicked into high gear when the new assembly took office. They refused to acknowledge the ruling by the TSJ and swore in the four disputed members anyway. The minority party, PSUV (the Chavistas) protested and a protracted back and forth began. The TSJ ruled that any laws passed by an assembly containing a disputed membership would be annulled and so on and so on. This continued for the next year or so meanwhile conditions for the Venezuelan people continued to deteriorate. Then the TSJ went too far which for Venezuela is saying something.

 In 2017 the TSJ announced that the National Assembly would be stripped of it’s powers and that they would be assumed by the TSJ. Although this was a blatant violation of the constitution, Maduro and the Chavistas violated the constitution constantly so it’s hard to figure out why everyone went crazy but they did. I guess Maduro didn’t want any competition for his rule by decree due to the emergency powers that were no longer granted by the National Assembly but powers he granted to himself and were confirmed by the TSJ. Like so many things Venezuelan it was a combination of the classic Laurel and Hardy “Who’s on first?” routine with a little Marx Brothers thrown in.

 More tomorrow….