Archive for July 8th, 2012

Another Day, Another Control In Venezuela

July 8, 2012

Given the huge arbitrage between gasoline prices in Venezuela and Colombia (There is a factor of 65 difference in price!), contraband between the two countries is a very profitable enterprise. But rather than attacking the problem at its roots, the Chavez Government always has to invent a new form of control, when it can not impose order in a more rational way.

Thus, the Government introduced a form of rationing, which they call the “chip”, which is nothing more than a bar code attached to the windshield of your car. You are assigned a monthly quota and before you are dispensed gasoline, the gas station reads it and if you have not consumed your quota, the gas is dispensed

The system was first implemented in Tachira state, where it raised some noise. But now that the Government wants it installed in what is probably the most anti-Chavista state in the country, Zulia, it has become a campaign issue as Zulianos feel they are being picked upon for their anti-Government stance.

But the truth is that it is the huge difference in gas prices which promotes this business, but it is not the individual cars that contribute the most to the problem, but large vehicles with huge tanks, which cross the border to Colombia under the eyes of the Venezuelan National Guard, which has been duly paid off to look the other way.

Of course, implementing the system is a mess, long lines, the sale of the free chip for a price, being able to acquire a second chip if you want and accusations that the “chip” is sold to the Government by the son of the Chavista candidate for Governor of Zulia. The whole thing is a mess, as people now will likely go to other adjacent states in Venezuela in order to fill up when their quota runs out.

But more ominously, people fear that the chip will become a nationwide system and the perverse gasoline subsidy will become a rationing system as the price of gas has not been changed in 13 years.

Thus, rather than deal with a problem of their own making, the Chavez administration simply creates another expensive and perverse control mechanism, which is unlikely to stop the real problem of the “bachaqueros” (Professional gas smugglers) but creates yet another from of control and supervision.

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