How Far Can Venezuela Go In Raising Gas Price?

(AFP, Esteban Rojas, 5.Aug.2018) – In Venezuela’s inflation-hit economy, a single US dollar can buy 3.5 million liters of gasoline — an absurdity that the government says it will tackle with a hike in the cost of state-subsidized fuel.

But just how far can President Nicolas Maduro go without getting his fingers burned?

Subsidized gas

Maduro announced on July 29 plans to adjust the price of gasoline and regulate sales based on the so-called “fatherland card,” an electronic card that provides access to subsidies. As a first step the government began a census of motor vehicles, set to end on Sunday.

A liter of 91-octane gasoline currently costs one bolivar, while 95-octane gas costs six. By contrast, a single egg in Venezuela’s hyperinflation ravaged economy — estimated by the IMF at one million percent in 2018 — costs 200,000 bolivars.

A dollar on the country’s black market is currently trading at 3.5 million bolivars.

Experts say the retail price of gasoline covers just between two and four percent of its cost of production.

Maduro has kept details of the fuel price adjustment under wraps, but he said that “we are paying to throw it away … we need to move to a rational usage.”

Yet talking openly about cutting the gasoline subsidy has been a taboo since the 1989 riots known as the “Caracazo,” which were triggered by a rise in fuel prices and left 300 people dead in Caracas and towns surrounding the capital.

Even though the iconic late leader Hugo Chavez questioned the rock-bottom prices of state-subsidized fuel during his term in office between 1999 and his death in 2013, even he never touched them.

In 2016, Maduro authorized the first price hike in 20 years, but only by between 1.328 percent and 6.566 percent, which made no impact on the derisory prices.

The new adjustment will come at a time of profound stagnation, in an economy that has not stopped shrinking since 2014.

Inflationary subsidies

Fuel subsidies have cost the Venezuelan government $10 billion a year since 2012, petroleum expert Luis Oliveros told AFP.

That has created a such a gaping hole in the budget that the government has tried to fill by printing more money, which in turn has created even higher inflation, Oliveros said.

“It is a lie that increasing the price of fuel is an inflationary measure,” he said. “The subsidies are hyperinflationary.”

The situation has only been made worsen by the drop off in oil production from 3.2 million barrels a day in 2008 to 1.5 million in 2018.

That is why the operating capacity of refineries has fallen and gasoline imports have risen.

In a perverse twist, there has been a decrease in the demand for fuel because 90 percent of Venezuela’s public transport vehicles are out of operation because there cannot buy spare parts to keep them on the road, according to unions.

Venezuela imports 33,600 barrels of gasoline and 36,000 barrels of diesel a day from the United States, according to the US Energy Information Agency.

Maduro has yet to explain what happens to consumers who do not have a state-issued “fatherland card.”

With wages ravaged by hyper-inflation, it is unlikely prices will get anywhere near international levels. If they did, however, filling a gas tank would cost a Venezuelan two years of their minimum-wage income.

“Prices are so far behind that no matter how big the increase in terms of percentage, they will still remain low,” said Henkel Garcia, director of the Econometrica consultancy group.

Social ‘blackmail’

Economist Luis Vicente Leon said the government will use greater subsidies in the “fatherland card” system to ensure that fuel is affordable for all cardholders.

According to the opposition, this card is designed for the Socialist government to broaden its support base, which has been weakened by the economic crisis and longstanding shortages of food, medicine and basic goods.

The 12 million Venezuelans with the cards — a third of the population — systematically receive food vouchers.

“If they are already using food and medicine as a form of blackmail, then why not gasoline?” said Oliveros.

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Bolivia Aims to Start Production of Bioethanol

(Efe, 5.Aug.2018) – Bolivia is on the verge of producing bioethanol at a mass scale in an effort to phase out the country’s reliance on imported gasoline and diesel additives, which are used to improve the performance of both fuels.

The project is mainly driven by the privately-owned Guabira sugar plantation, located in the city of Montero, near Santa Cruz, the county’s second city.

During a press conference organized by the Bolivian Foreign Trade Institute (IBCE), Guabira chairman of the board Mariano Aguilera told reporters that the mass production of ethanol will mean that the country will not need to import further fuel additives.

The company’s first 10,000 liters (2,642 gallons) of the fuel were tested on an assortment of vehicles – operating across a range of climates – yielding “optimal” results, Aguilera said.

“At this moment, we have five million liters (1.3 million gallons) to deliver to YPFB,” the businessman said.

In May, the government partnered up with Santa Cruz sugarcane producers to boost the production of the fuel.

To that end, the sector is set to receive an investment of some $1.5 billion, which is aimed to expand sugarcane crops from 151,000 hectares to 330,000 hectares (373,129 acres to 741,316 acres), the IBCE said.

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BPTT Helps Mayaro Students

Denyssa David of the non-governmental organisation, Global Villages, answers questions during the one-on-one session following the official launch of the LEAP initiative that is being sponsored by BPTT.

(Trinidad and Tobago Newsday, Jada Loutoo, 5.Aug.2018) – Some 25 students from across the south-eastern community of Mayaro are set to benefit from a revolutionary new developmental programme sponsored by energy company BP Trinidad and Tobago.

Entitiled “Life-Skills, Entrepreneurship and Problem-Solving (LEAP)”, the two-week programme was launched at the Mayaro Resource Centre on Thursday. Developed by Mayaro-based Business Clinic, it focuses on students between the ages of 12 and 16 and has engaged local non-governmental organisations such as Global Villages, as well as consulted with various community leaders, educators, parents and other stakeholders to ensure success and tangible benefits to the students.

Ronda Francis, Corporate Responsibility Manager, BPTT, gave an overview of the initiative: “BPTT has always been progressive in terms of supporting youth-based development initiatives. This programme is revolutionary and does not fit the mould of the usual ‘vacation camp’. LEAP is seeking to empower young people with entrepreneurial skills, within the direct context of understanding and embracing their roles as future community leaders. At the end of this workshop, we hope to have a cadre of creative problem solvers who embrace leadership roles that encompass the development of Mayaro and the nation as a whole.”

Featured activities in the LEAP workshop will include vision setting, conflict resolution techniques and group discussions on viable and emerging business ideas. The participants will also be engaged in field trips that will encourage them to assess their spaces and communities in order to increase their awareness, expand their ability to deal with dynamic situations and build positive leadership qualities.

As Sherese Chee Mook, one of the LEAP-leaders, explained, “Through practical workshops, creative learning activities, field trips and other activities, we intend to sharpen the participants’ self-awareness. This will serve to connect them with opportunities to assess their natural and physical environment, problem solve and think beyond conventional solutions. LEAP goes to a level where we as a community are becoming masters of our own destiny, and as such, we are empowering our young leaders to take us to a better future.”

The launch was well attended by parents, teachers, local entrepreneurs, and other community stakeholders, including Member of Parliament for Mayaro, Rushton Paray, who pledged his full support for the initiative.

“Let me first recognise the role of BPTT in terms of investing in and supporting initiatives that build up and hold our community together. This is yet another example of their vision for a better Mayaro and it’s good to see so many young people leading this initiative and taking ownership of the future. The perspective of taking the problems affecting our communities and applying entrepreneurial solutions is innovative and worthy of support. If there is anything that I can assist with, I am willing to be a part of this programme that will see Mayaro ‘LEAP’ ahead,” Paray explained.

In recognition of individualism, LEAP was designed to accommodate multiple learning styles to encourage participants’ understanding and maintain their engagement. Following the official launch which served to sensitise parents and other stakeholders about the purpose and structure of the programme, there were smaller one-on-one sessions with the LEAP team that facilitated direct answers and clarification on the initiative.

Lisa Mahabir, mother of 13-year old Guayaguayare Secondary School student, Emily, was enthusiastic about the programme, “This is an excellent initiative and in fact, after today I want to volunteer and help in any way that I can. This is focused on taking charge and heping young people to see and approach things differently so that they can create new opportunities to help build a new Mayaro and a stronger Trinidad and Tobago.”

Emily was also very keen about the opportunity, “My mom always supports me in anything that I want to do to be a better student and a better person overall and that’s why we are here today. I have always dreamt of being a chef and I think that LEAP will give me more ideas on how I can achieve this dream, while also making Mayaro a better place for everyone. I really can’t wait to be a part of this wonderful learning experience and I want to be a role model and leader who makes the world a better place.”

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