We’ll go Down The Rabbit Hole in a sec but first…Rio Times reports that the Venezuelan currency, the bolivar, lost 9.4% of it’s value against the dollar in August, according to BCV (Venezuela Central Bank) which showed a rate of 32.59 bolivares/dollar at the end of August. (FYI, the black market rate, which is the real rate, is over 34 bolivares/dollar)
On July 31 BCV reported the rate at 29.50, which was down 5% from June and had already declined 37.39% for the first half of the year. This puts the minimum wage, which is paid in bolivares, at about $4 A MONTH!
I know this looks bad (because it is) but with Chavismo you have to keep things in perspective. The $4 A MONTH minimum wage may be well below the UN metric for extreme poverty, which is just over a dollar a day, but it’s nowhere near Chavismo’s previous low of 67 cents A MONTH!
Remember, when Hugo Chavez took power and ushered in the era of 21st Century Bolivarian Socialism, he decried what he called an unacceptably low minimum wage of $200/ month.
Oh, and don’t forget that between Chavez and Maduro they have lopped 14 zeros off the value of the bolivar so…to buy what cost one bolivar in 1998 you would need 100,000,000,000 bolivares… Viva la Revolution!!
Now, lets head Down The Rabbit Hole…
Chapter 8/ continued…
…So why does this continue? It can’t be political reasons since Maduro is a dictator and has already proven he doesn’t care what anyone thinks. It can’t be that, like in the good old days, he’s raking in so much with oil sales and loans he simply doesn’t care about lost revenue. So…what is it?
I’m sure nobody will be surprised that the reason involves the military and smuggling. We already know that we have an Army general running PDVSA and that the Army is in charge of food distribution as well as medicine. Maduro’s fraudulent CLAP food program is run by the most powerful ‘colectivos”, his civilian militia of armed motorcycle gangs numbering in the hundreds of thousands. With cash being tight and those other avenues not producing what they used to, how can he keep the military happy? Since the military controls the border, except where it’s controlled by FARC/ELN guerillas from Colombia, who are in league with the Chavistas, smuggling is an easy task and with the gasoline price so much higher in Colombia it’s quite lucrative.
At a cost of $0.000001 per liter or approximately $0.000004 per gallon (the reference point for us gringos) an average tanker truck that holds 13,400 gallons costs about a nickel, yes…five cents per truckload! So, lets say you can sell it for half the legal price. At that rate each tanker truck is worth about $20,000. Not a bad return for each $0.05 invested.
The only real issue for the military/ smugglers is supply. As we saw earlier with PDVSA, production has collapsed. A rational person would deal with the domestic supply issue first which, by the way, is a requirement for membership in OPEC (all members must guarantee domestic needs before exporting). Even a rational crooked person would ensure that the smugglers have something to smuggle. It’s getting harder and harder for Maduro to keep the smugglers happy due to his determination to keep shipping oil/gasoline to Cuba, who keeps him propped up, dominating his internal security apparatus.
While gas rationing is in place in several states people wait in line for days in others for their free gas. At the same time Maduro is sending tankers full of oil to Cuba. When a tanker captain, in 2019, refused to pilot his ship to Cuba, in light of US sanctions, SEBIN security forces boarded the tanker and replaced the captain with one more Chavista- friendly. Another sanctions-evading method is for vessels to disconnect their transponders when they near other country’s national waters en route to Cuba to avoid detection and therefore seizure. They have also had gasoline shipped direct to Cuba when Venezuela refineries couldn’t produce it.
Summary : This won’t take long. Gasoline is, for all intents and purposes, free in Venezuela (at least the domestic subsidized price), one ten thousandth of a cent per liter (as of 2019). The price doesn’t remain low to benefit the people. As we’ve seen, Maduro shows nothing but disdain for them but he does need to keep the military happy. Funny how being able to smuggle tanker trucks that cost a nickel and they can sell for $20,000 will do just that. With the Venezuela people either subject to gas rationing or having to wait in line for days to fill their tanks, how can Maduro be shipping oil/gasoline free of charge to Cuba in return for his Cuban “advisors”? The Venezuelan people deserve the same commitment from their president (dictator) that he shows to Cuba. The problem for them is that the Venezuelan people don’t have anything Maduro needs. Elections are rigged so he doesn’t need their votes and the people benefiting from oil shipments and smuggling have proven more than capable of repressing any dissent. To Maduro the Venezuelan people seem to be nothing more than a necessary evil.
That will do it for this holiday-shortened week. We’ll be back Monday with our next installment of Venezuela : Down The Rabbit Hole as well as more current news. Until then…Have a great weekend everybody!!!
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