Maduro Says Venezuela Will Begin Curbing Oil Subsidies...Well, Kind Of

Caleb Tolin | August 14, 2018

Venezuela is the home of one of the richest, most dense oil reserves in the entire world. It's also home to some of the cheapest oil prices, thanks to socialist policies that have artificially lowered the cost of gas for millions of poor Venezuelans.

But those policies, carried on by Venezuelan President Nicolas Maduro, have created a black market for their cheap oil to be smuggled into neighboring Colombia -- a crisis the government now plans to correct by curbing their own subsidies. 

Kind of.

"Gasoline must be sold at an international price to stop smuggling to Colombia and the Caribbean," said Maduro in a televised address.

Venezuela subsides their fuel like crazy, which results in the price being insanely low. In turn, some people smuggle this cheap oil across the border into Colombia, where the gas prices are higher.

To combat the smuggling, Maduro has said only certain individuals who register with the government and receive a specific government-issued I.D., called the Fatherland I.D., will now be eligible for the subsidized fuel. According to the BBC, not everyone has this card because opposition groups believe Maduro is using them to keep an eye on certain individuals.

The current plan is that everyone who has a Fatherland I.D. is able to purchase the subsidized fuel for “about two years” starting on August 20. Card holders will also be able to purchase subsidized food and other benefits.

For those with the I.D. in Venezuela, gas will still be dirt cheap. When converted from the Venezuelan bolivar to the U.S. dollar, tanks of medium-sized cars can be filled for as little as $0.01. Venezuelans are incredibly car-dependent because the government ran public transportation system is horribly dysfunctional and a lot of Venezuelans have to travel long distances to go to work.

But those without the I.D. cards, such as Maduro’s opposition, won’t be able to afford the unsubsidized fuel because the "international price" is significantly higher than the subsidized price. Given that nothing is stopping anyone with this Fatherland I.D. from buying the cheap gas and selling it on the black market to individuals in Venezuela, Colombia, or anywhere else, this disparity is leading many to question whether Maduro's sudden concern over Venezuela's oil smuggling business is really just a political move to try and stomp out the resistance movement by forcing them to adopt his government I.D., or give up their fuel.

Maduro has a strong monopoly over the economy in Venezuela. He has worked to control prices and control the wages of workers. In an announcement about switching to a cryptocurrency called the Petro, Maduro addressed these issues and demanded respect for his efforts.

“This means a substantial improvement and a better stability of incomes of workers,” he said, “while setting a maximum price of sale for the public, which ought to be respected.”

As MRCTV has reported previously, the Venezuelan economy is in a rapid downward spiral and inflation is in the millions. Other moves from Maduro’s administration to help combat this have been excessive and highly militant.

(Cover Photo: María Alejandra Mora)