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April 17, 2018

LATE-STAGE SOCIALISM: How Venezuela has resorted to importing oil as its core industry faces collapse. “They are importing barrels that cost $80 to $90 and selling them at $0.”

This is like something out of Atlas Shrugged:

The long queues for food and medicine in Venezuela are now well documented, but lines of cars waiting outside petrol stations – something that would have been unthinkable a few years ago, when petrol cost $0.01 (0.7p) per litre – are becoming more common.

Filling your tank is still cheaper than drinking water in Venezuela, but the industry can no longer meet domestic demands – and is having to put exports first. Monaldi says that if production continues to fall to below a million barrels, the consequences could be catastrophic.

“The domestic consumption of oil is around 450,000 barrels and Venezuela needs the exports to repay its debt with Russia and China,” he says.

“They have to import for two reasons. One is the collapse of the refining infrastructure and the other is that its oil is naturally heavy so they need to import diluents to blend with their oil to re-export it.

“One of the craziest things is that a part of Venezuela’s imports is for the domestic market, but given its price, they practically give gasoline away for free. They are importing barrels that cost $80 to $90 and selling them at $0.”

Cheap gas is one of the ways Maduro (and Chavez before him) buys support from voters. Looks like yet another socialist countdown clock is racing quickly towards zero.

Update: Link was missing — fixed now, sorry!