"free gasoline" in Venezuela. That ought to help.
Does it force the conversion to a rise in the price of gasoline?
26 July 2018
The monetary reconversion that the government tries to apply suffered a new change that throws into the discussion the issue of the increase in the price of fuels. According to the last decision of the Executive, the bolivar will have five less zeros as of August 20 ,
which indicates that the gasoline of 91 octane (today in Bs 1) will cost BsS 0.00001 and that of 95 octane (today in Bs 6) will have a value of BsS 0.00006.
These new prices would make it impossible to pay in cash since there are no fractions to deliver the change if it is canceled with the lowest denomination currency that will be BsS 0.5.
It remains to be seen the new rules of application of monetary reconversion that the Central Bank of Venezuela must publish to replace the previous ones that established the rounding criteria based on the elimination of three zeros.
In the monetary reconversion of 2008 a similar situation arose, but the government did not adjust the price of gasoline. Neither did that possibility appear before the imminence of the application of the measure in June or the first date of August.
The operative inconveniences for the payment in the gas stations before the present crisis of cash have been increased, to the point of which the drivers leave in the hands of the firemen much more of the cost of the fuel and already almost nobody has denominated bills of low denomination.
In the event that the government decides to match the price of gasoline to that of the currency with the lowest value of the monetary cone (BsS 0.50), the increase would be 5,000,000% for the 91 octane or 833,217% for the of 95 octanes.
This means that if a car has a 50-liter tank, it currently costs Bs 300 to fill it with 95 octane gasoline. With the entry into force of the conversion would be BsS 0.003. Now, if the government adjusts the price and the liter of 95-octane gasoline costs BsS 0.50 (equivalent to Bs 50,000 today), filling that tank will require BsS 25 (Bs 2,500,000).
To evade the measure to increase the price of fuel, Petróleos de Venezuela (Pdvsa), the only company in charge of the administration of gasoline pumps, would have to install points of sale or another payment mechanism in each of the 1,658 service stations.
http://www.bancaynegocios.com/obliga-la-reconversion-a-un-aumento-del-precio-de-la-gasolina/
Either that, or the price of gasoline goes up by a factor of 100,000.
Nearly free PdVSA gasoline is being smuggled wholesale (by those connected with Chavismo, the enchufados) into Colombia and Brazil, where it is sold at a HUGE markup, but less than the local cost of petrol. But the good news is that fewer vehicles are on the road in Venezuela, because there is no new cars, no spare parts to fix cars, no tires and no motor oil to run the engines. So, less gasoline is actually being used. Which again, is helpful, because Venezuela cannot refine its own oil due to nearly 20 years of neglect.
iViva la Revolucion!
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