We’ll go Down The Rabbit Hole in a sec but first…When I saw this first one I couldn’t help thinking about the classic TV western “Rawhide”…Insight Crime reports that an increase in cattle rustling (Yes, cattle rustling) across Venezuela has been driven by the joint involvement of public officials and criminal groups, with ranchers sounding the alarm about how this is spreading seemingly unchecked.

 There are reported cases of animals being shot dead because ranchers refuse to make extortion payments.

 An investigation in Venezuela media, Alberto News, reported that senior agricultural officials in Carabobo state, including the former head of Venezuela’s National Land Institute and the current director of the National Institute of Integral Agricultural Health are involved.

 In the state of Anzoategui ranchers are reporting cattle theft has soared this year. From 2017-2022 it happened maybe once a month and now it happens every week. Ranchers in the area blame a criminal alliance between thieves and local officials who illegally grant permits to transport meat of unknown origin in containers, passenger buses, and private vehicles.

 In the state of Apure 150 families in ranching communities have been persecuted by a network of army, police, and government officials by illegally seizing cattle and arresting those who complain and forcing them to pay to be freed. (Government-sanctioned kidnapping, anyone?)

 Along the border with Colombia rebel groups like ELN, who operate with the protection and cooperation of the Chavistas, dominate cattle rustling across the border into Colombia, with Venezuela ranchers losing about 700,000 head per year.

 You don’t hear much about it but cattle rustling is a huge problem in Venezuela and couldn’t happen on this scale without facilitation by government officials. We already knew the government was involved in trafficking of gasoline, drugs, food, and medicine in Venezuela but cattle rustling…really?

Then we have Rigzone reporting that PDVSA (Venezuela government-owned oil company) vice-president, Juan Carlos Diaz, announced the price of diesel will return to the subsidized price 3 bolivares per liter (about $0.10) after hiking the price to $0.32 per liter earlier in July.

 This comes after a meeting with industrial groups, farmers, and cattle owners and has already been posted in the official gazette.

 I know the increased price of $0.32 per liter (about $1.30 per gallon US) seems cheap but, then again, we don’t have a minimum wage of under $5 a month!

 That’s the good news. The bad news is you still have to wait in line for hours (or days) to buy it.

 Let’s head Down The Rabbit Hole…

 Chapter 3 continued…

 …Now that’s the oil business in general. For Venezuela it gets a bit more complicated…and expensive. The existing oil fields in Venezuela are a combination of heavy and less-heavy oil but not the light-sweet crude found in some areas of the world. Most of the recently discovered reserves are of the heavier variety. They require mixing in condensate before it’s usable which is expensive and also limits which refineries can receive the oil. If you have been receiving light-sweet crude from the Middle East you can’t just switch to Venezuela crude. That limits the customer base or requires upgrading refineries, a very costly proposition.

 As you might expect, PDVSA exploited the lighter and most easily extracted oil first leading to thousands of existing wells and reaching a high of 95 drilling rigs in operation in 2011. Now most of the existing wells have fallen into disrepair due to lack of maintenance and the rig count is about 20 operational drilling rigs, and that’s on a good day. Some days there are zero, yes ZERO rigs in operation.

 While production dropped from it’s all-time high under Chavez to approximately 2 and 1/2 million bpd (barrels per day), it didn’t fall off a cliff until Maduro came along. The average production for last year was just over 625,000 bpd. and has been under 400,000 bpd. Anyone who has ever owned a home, a car, or almost anything for that matter, knows that without maintenance things break down. The Chavistas either failed to grasp this or simply didn’t care. They were too busy siphoning off all the profits to fund their ever-expanding social programs, referred to as “missions”, or just lining their own pockets. Worse yet, as we discussed when we talked about the hospital, they engaged on an unprecedented (and unnecessary) borrowing spree.

 Any rational person would see the outlook for the future wasn’t exactly rosy. Well, there are a couple of other factors that would have a negative impact as well. Take, for example, Petrocaribe.

 The Chavez vision of “21st Century Bolivarian Socialism” wasn’t just about Venezuela being an economic power but a political one as well. He began engaging countries throughout Latin America and the Caribbean in multilateral organizations like ALBA, CARICOM, MERCOSUR, UNASUR, and so on. In order to ensure their support of Chavismo policies they set up Petrocaribe whereby Venezuela would use it’s ability to supply oil to the 17 members on unbelievably favorable terms in return for their solidarity with “The Bolivarian Revolution”.

 The members, of which Cuba is a de facto member, were able to buy oil, per their various quotas and terms tailored to each countries specific needs and ability to pay, for anywhere from 5% to 50% upfront, then a two year grace period, then finance the balance for between 17-25 years at 1% interest. PDVSA would also allocate funds for member country’s social programs (while also funding Chavismo’s “missions”) and partnering in various refining and power generation projects among member countries. While the available quotas were somewhat higher, Petrocaribe supplied, on average, approximately 100,000 bpd to member countries and another 98,000 bpd to Cuba. It’s worth remembering that Cuba paid nothing upfront in return for supplying medical, military, and security personnel to “The Revolution”.

 More tomorrow….