Thursday, November 01, 2018

Venezuela's Gas Shortage

Venezuela now has gasoline shortages. The problem starts with oil production, which has been shaky under Nicolás Maduro and then went even more steeply down in the past 2-3 years.


PDVSA has to export in order pay off debts--it just did so for India--even as production is plummeting, such as from a tanker collision. And its creditors are taking action:

Besides a steady decline in production, Venezuela’s state-run oil company earlier this year ran into problems with its storage capacity and export terminals in the Caribbean as U.S.-based ConocoPhillips took an aggressive approach to enforcing a court ruling that awarded it US$2 billion in compensation for the forced nationalization of two projects in Venezuela. The company this summer seized several of PDVSA’s assets on Caribbean islands, which made it difficult for the Venezuelan state company to meet its export obligations. Having few options, PDVSA eventually caved, settling with Conoco.
All this eventually had to trickle down to Venezuelans themselves, who pay very little for gasoline. The loss of fuel really hammered Cuba during the Special Period and it doesn't take a genius to see it wreaks havoc on the economy (perversely, it is good for the environment).

Oil, oil everywhere and not a drop to put in your vehicle or machine. This becomes the ultimate failure. Venezuela always did one thing, and that was oil. Now it can't even do that.


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