The bit they don't show the tourists

The Petrocaribe Trap

A guest post by Alexis Caraballo, who makes her living as a Caribbean regional analyst. A failing economy, where everything for sale in the shops is imported, with dwindling foreign reserves and on the brink devaluation. Sound familiar? It does to folks in Jamaica, a country that breaks records not just in the 100-meter dash (9.58 seconds) but also in debt-to-GDP ratio (139%)…

international-energy-agency_0

The oil market vs. Maduro

Oil production outside of Venezuela continues to rise, and this poses a threat to the Revolution. This interview with International Energy Agency chief Maria van der Hoeven (from OilPrice.com) lays it out. The money quote: “…In our January 2014 Oil Market Report, we noted that with US crude oil production exceeding even the boldest of expectations…

Bachacos

Bachaqueo chronicles

Two items today on the smuggling of gasoline from Venezuela to Colombia – commonly known as bachaqueo. Both are in Spanish. This first-person account by Colombian journalist Sinar Alvarado is a must-read. Alvarado takes us to the back roads on both sides of the border to give us a real sense of the “business” and…

The object of one's addiction

Ban the poison

After an eleven-year course on currency exchange controls, it’s time to take our final exam boys and girls. The test has a single question: what have we learnt about currency exchange controls? Is it that … they are ineffective at stemming capital flight; they create huge distortions; they usually lead to an overvalued currency; they…

Putting the “dead” in deadweight loss

Subsidizing gasoline is such a multidimensionally bad idea, the study of all the different ways in which it’s counterproductive could take up the bulk of a very productive economist’s career. Over the years we’ve written about many of the angles: from air quality and congestion to the effects on urban development patterns, the state’s finances,…

Pero Tenemos Free Gas

Omar Z., over on his increasingly invaluable blog, points us to the nub of the nub of the issue: the enormous, fast-growing debt that PDVSA has been running up with the Central Bank this year. If you’ve been paying attention you already know that, more than anything else, it’s the uncontrolled growth in the money supply…

Make gas a priority

Reading this story on the latest goings-on in the liquified natural gas market, I keep thinking back to 1990, the first time I heard about “Proyecto Cristóbal Colón.” Venezuela has enormous reserves of natural gas, particularly off its Eastern shores. Decades have gone by, and thanks to populism, lack of clear rules for investment, and…

The butterfly effect

On October 22, 1991, something momentuous took place in Venezuela. You probably don’t remember hearing about it in the news. Heck, maybe it didn’t even make the news (there was barely any Internet back then, so there is no link I can give you). On that day, in the middle of the drunken boom times…

Malaysia’s Petronas to PDVSA: Buh-bye

Malaysia’s Petronas is withdrawing from the Petrocarabobo oil fields in the Orinoco Heavy Oil Belt, citing irreconcileable differences with the government. The money quote from the Reuters piece: “One source close to the project told Reuters that frequent changes in the fiscal framework, disagreements with the government of Chavez’s successor – Nicolas Maduro – about…

No good faith

The World Bank’s ICSID Arbitration Panel ruled a few days ago that Venezuela lacked “good faith” and did not adequately compensate ConocoPhillips for the seizure of the latter’s assets back in 2007. Speculation is running rampant about how much money PDVSA will now have to fork over. PDVSA bonds fell when the ruling became public…

Golden Oldies

And so, one year on, the Winner in the Amuay Explosion Excuse Category, mención Transparently-Fabricated-but-Damnit-We’re-Sticking-With-Our-Story is… [envelope-rustling...] Sabotage! Well how about that! No surprise here, folks: Sabotage was the hot favorite for the prize from day one. And why shouldn’t it be?! The regime is sticking with the classics - no need to reinvent the wheel when you have…