Chavez’ Extra Pocket Money From New Decree

April 25, 2011

In the previous post, I said that the new decree issued by the Government would give Chavez about US$ 11 billion in extra pocket money, but I failed to take into account the fact that he was already harvesting some of the money, since there was a previous decree that gave Fonden 50% of all the revenues above $70 per barrel when oil is below $100, plus 60% of the amount in excess of $100, when oil goes above $100.

Below a graph:

in which I show on the left the difference between the old “tax” (Red Line) and the new “tax” (purple line), with scale on the left. These are dollars for each barrel of oil that go directly to Fonden.

Using the scale on the right, the green line then shows the extra revenues the Government will receive from this new “tax”, assuming exports of 1.6 million barrels of oil a day, where I mean the new extra money, not what the Government was receiving before. Thus, around US$ 105 per barrel it is about half a billion US$, half of what I had calculated. If oil goes to $150, it will be almost US$ 23 billion.

I also note that according to Carlos Vecchio, the new decree does not follow the Enabling Bill and violates the Constitution. Chavez would have had to create specific fund in order for this to be legal.

18 Responses to “Chavez’ Extra Pocket Money From New Decree”

  1. E H Says:

    Just for formality, could some process start at some court declaring the (i)llegality of the fund?

    At least for all to see the behavior of the powers that be?

  2. moctavio Says:

    Well, the Courts have said nothing about the injunctions introduced to declare the Enabling Bill illegal. The same will happen here, I am sure someone will do it.

  3. bobthebuilder Says:

    I like the graph – over what timescale would these funds be accumulated?

  4. island canuck Says:

    Off topic:

    Chavez announces new wage increases of 15% on May 1 & 10% on Sept. 1. Built in inflation

    Chavez announces the Cesta Ticket program will be extended to all employees. Previously it only applied to companies with more than 20 employees. The cost for small businesses is another 30% per employee in salary even if you have only 1 employee. Who are the owners of Cesta Ticket? It’s a private company. How did they get so chummy with Chavez.

    The CNE announces that they are considering presidential elections in July or August (LOL!) and mayors, etc in November. That will really kick the MUD with their stupid February primaries. That’s just too predicable!

  5. moctavio Says:

    The rest of the year, sorry.

  6. jsb Says:

    How did I miss the Cesta Ticket thing? Can someone explain the program to me? Is it a credit card service? Debit card? Do employers have to kick in a certain amount?

  7. island canuck Says:

    jsb:

    As I understand it all employees in companies of more than 20 employees either had to have a meal program or give each employee the equivalent of 25% of a “unidad tributaria” per day, currently around BsF.19 per day or BsF.418 per month based on a 22 day month. This applies whether they are working or not – vacations, maternity leave, etc.

    This will now apply to all companies regardless of the number of employees – from 1 up. If your company does not have a meal plan – cafeteria for example – you can pay the employees with “cesta tickets” which can only be used for food products in supermarkets, etc.

    I may be incorrect on some of these details as we have never had to deal with it before as we only have 3 employees.

  8. Luis Peña Says:

    Island, the last time i received the benefit of cesta ticket it was some kind of “good worker” benefit. Meaning that you receive a cesta ticket for every day you went to work. So if for any reason you miss a day of work, that was one less cesta ticket to receive. Also meaning than on holidays you didn´t receive any cesta ticket.
    Well, that was five years ago. I don´t know if now you receive as a fixed amount no mater what

  9. island canuck Says:

    Luis I believe it is now compulsory.

    The big question is who is behind Cesta Ticket here in Venezuela?
    This is a huge windfall for them. How do they make their money? They must rake a % I guess.

  10. pol47 Says:

    Amazing; Chavez is stealing millions of dollars per day from the people of Venezuela and you people are worried about Bs 418 provided to a worker in another goverment scam.

    No wonder the people of Venezuela are so screwed.

  11. Roberto N Says:

    Years ago, it was SODEXHO that ran the cesta ticket program. Not sure if that is still the case.

    Does anyone know if the cesta ticket is part of the “salario integral”? If so, it will also make it more expensive in terms of severance pay, aguinaldos and utilidades.

    And to answer you, pol47, yes we do worry about those things too.

    I can tell you do not run a business in Venezuela.

    If you did, those 418 BsF. would worry you too. So you see, not only do we have to worry about our charlatan and his hijinks, we also have to worry about our bottom lines in order to keep food on our table and our employees tables too.

  12. Bill near Slidell Says:

    Unfortunately, for most of the people on this planet, (the exception being SOME of those living in oil exporting countries) the days of cheap oil are gone. Sure, another financial collapse, like the one that occurred in 2008, might once again bring down the price of oil temporarily. But it will soon recover, unless the global economy melted down so much that oil demand was substantially reduced for several years.
    Without another Great Depression, the price of oil will only go up from here. It will not go straight up, nothing ever does, but the trend will be continually up. The easy to find oil has all been found. About half of the easy oil has already been used. Oil companies aren’t drilling in mile deep water because they like taking huge financial risk. They are desperately trying to replace what they are producing. So the few countries with remaining large reserves of liquid oil, (excluding kerogen in shale, which isn’t really oil and will be very expensive to produce) of which Venezuela probably has the largest amount, will see increasing amounts of money flow their way. There is simply no cheaper substitute for crude oil. No other LIQUID fuel can be produced in the quantities needed to substitute for the oil used to transport almost everything. There are far too many people on this planet that need to eat, to be able to convert enough farmland to grow any fuel crops, like sugarcane, to replace even a small percentage of the 86,000,000 barrels of oil used every day. Two & two-thirds CUBIC MILES of oil now burned yearly is a lot. I doubt there is enough land and fresh water on this planet to grow any crop to replace that amount of oil, even if no one had to eat. Very few people grasp the enormous size of the global oil industry, because they never see it. They think oil, like water, will always be there. Sooner than they think, they will discover how wrong they were.
    I know that speculators increase the price of oil somewhat. But if they are controlled, the OPEC countries will just cut back on production a little, and the price will soon be right back up. In a few more years, when they are all producing flat out, any of them will be able to raise the oil price by holding some oil off the market. Just an announcement will work. (I got blocked from a web site from discussing that! All my comments are now ‘moderated’ into oblivion. I could care less. I was just trying to warn people about what I think will happen. At 60, I could very well be dead before it actually does.)
    So unless there is another global financial meltdown, Hugo will have enough money to spend in order to stay in power. As time passes, we will have no choice but to spend more and more of our income on oil. The transfer of wealth to oil exporting countries, like Venezuela, will be unlike anything seen in human history.
    I hope I’m wrong, but I wouldn’t bet on it.

  13. moctavio Says:

    After reading the decree again, I am wholly confused…


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  15. [...] News and Views explains the effect of the amendment; The Devil’s Excrement plots the [...]

  16. jsb Says:

    Thanks for explaining the tickets.


  17. [...] The Devils Excrement  har gjort en graf över hur mycket pengar det handlar om: [...]


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