Gasoline Shortages Hit Western Venezuela

Whilst the government hinted at import problems due to US sanctions, others have cited additional factors, including cross-border smuggling, poor maintenance and increased demand due to the upcoming price hike.

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Drivers wait in a long queue to fill their tanks in Carabobo State
Drivers wait in a long queue to fill their tanks in Carabobo State. (El Carabobeno)
By Paul Dobson
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Merida, November 5, 2018 (venezuelanalysis.com) – Drivers reported staggering queues to fill their tanks in Venezuela’s western states over the weekend, as existing gasoline shortages worsened, impacting at least half of Venezuela’s 24 regions.

In some provinces, lines extended for over ten hours, with problems reported on social media in the western states of Falcon, Lara, Barinas, Aragua, Carabobo, Cojedes, Merida, Tachira, Zulia, Guarico, Apure and Portuguesa, metropolitan Caracas and Miranda State, and Anzoategui State in the east. Public transport and commercial distribution networks have also been affected.

Government spokespeople blamed the situation ─ which in some states such as Barinas and Merida has persisted with fluctuating severity for nearly three weeks ─ on supply problems of imported catalysts used in the Paraguana oil refinery complex.

“The fuel distribution problem across the country, which has caused long queues in service stations, is due to the lack of an imported catalyst which prevented the docking of an [oil] tanker in El Palito refinery,” explained Jesus Santander, secretary-general of the state government in Carabobo State Friday. Venezuela has been importing gasoline for many years due to the technical difficulties and steep costs associated with refining its extra heavy crude petroleum, which fails to meet national demand.

Santander stressed that authorities are taking measures to resolve the situation which they do not expect to persist and urged the population to maintain calm.

“A tanker arrived a few days ago… we know that there was a collapse and there are still queues because people believe that the situation will occur again, but it was a specific case which has been solved,” he continued.

Venezuela has problems importing many goods partly due to US-led financial sanctions which prohibit US citizens and firms from dealings in Venezuelan sovereign and state oil company debt. The sanctions have been especially felt in US-dominated global financial and banking sectors which process international commercial transactions, with the Caracas government denouncing numerous cases of frozen bank accounts and interrupted payments.

The measures have also caused significant problems for Venezuela’s nationalised oil firm, PDVSA, which has been prevented from repatriating a reported US $1 billion in annual profits generated by its US-based subsidiary, CITGO, as well as vital products produced there such as diluents used in crude processing in Venezuela’s refineries.

Independent estimates suggest that Washington’s sanctions have to date cost Venezuela US $6 billion in lost oil revenues due to falling production, seriously exasperating budget shortages and lack of investment in the country’s oil industry.

Apart from the explanation offered by Santander, a range of other factors have been identified as contributing to the acute fuel shortages hitting large swathes of the country.

Venezuela’s comptroller general, Elvis Amoroso, blamed the phenomenon on “sabotage” in gas-stations Friday.

“There are service stations which have seven points but only have two working. This of course creates a very worrying queue... we have enough fuel, and let me tell all citizens to be calm, don’t despair,” he urged.

Amoroso also announced that more than 25 million litres of fuel were to be distributed over the weekend as a special measure to ease the shortages.

For his part, National Constituent Assembly Deputy Gerson Hernandez, as well as numerous service-station workers, cited the poor state of PDVSA’s oil tanker fleet, alleging that a shortage of repair parts, especially tires and oil, has limited distributive capacity with much less fuel arriving to gas stations.

Similarly, Ivan Freites, trade union leader from the Unified Federation of Oil Workers (FUTPV), pointed out that plunging crude oil production has left the domestic market under-supplied.

“Production of fuel is practically paralysed across the country… we don’t have enough crude to fulfil national demand and we depend on fuel imports,” he explained.

OPEC has reported that Venezuela’s oil production has fallen from 2.8 million barrels per day (bpd) in 2014 to a mere 1.1 million bpd in September, largely due to international sanctions, mismanagement, under-investment, and migratory brain drain.

Freites also mentioned that extraction smuggling of gasoline, mostly to Colombia where the subsidised product is re-sold for sky-high profits, contributes to domestic shortages.

“Contraband is a problem which hasn’t been solved and we continue to suffer,” he continued.

Venezuelans are awaiting a sharp price hike in fuel, which continues to be sold at the highly subsidised price of 0.00000097 BsS per litre (US $0.00000000394 at the parallel market rate). Whilst new prices are yet to be announced, reports indicate that a dual system will be imposed, with subsidised prices close to 15BsS per litre (US $0.06) and non-subsidised ones close to “international” prices at 35BsS per litre (US $0.14).

The measure, which has been announced by President Maduro, is being tested in border municipalities and, should it prove successful, will reportedly be applied across the country. Despite frequent announcements in recent weeks anticipating the roll-out of the new system, the long awaited reforms have yet to materialise, generating anxiety and demand spikes in the population looking to take advantage of the existing subsidies.

Edited by Lucas Koerner from Caracas.