The most expensive gasoline in the world

[Bacchus4.0]

http://www.eluniversal.com/opinion/130304/the-most-expensive-gasoline-in-the-world

Venezuela has the most expensive gasoline in the world because the poor and those who do not own cars end up paying dearly for the most regressive subsidy on planet. The money that should be spent in a first-class, physical and social, infrastructure, in world-class education and health, able to remove poverty, is eventually used to cheapen the gasoline for the wealthy and middle class, who pay less than the cost of a bottle of water to fill their gas deposits, at the expense of the impoverishment of the meek.

A new government should phase out the subsidy –it could be done in a five-year term at a very low political cost. However, the current government simply cannot claim the moral high ground to do it, insofar as it keeps on giving away a significant portion of our oil income to Cuba, Petrocaribe and the rest of neighboring countries.

Oil consumption and smuggling in Venezuela amount to 700,000 barrels per day. That means that at the current exchange rate of VEB 6.3 per USD, it is sold domestically at approximately USD 2.5 per barrel. Notwithstanding the foregoing: (i) a barrel drilled in Venezuela costs about USD 15, including depreciation rate and a standard earning that allows for reinvestment (resulting in a difference of approximately USD 12.5 per barrel –cost of production); (ii) a barrel of oil is currently sold at approximately USD 105 in the world market (resulting in a difference of approximately USD 102.5 per barrel –opportunity cost); and (iii) a barrel after taxes is sold at USD 178.5 in a Colombian gas station (resulting in a difference of approximately USD 176 –total cost plus taxes).

Based on the cost of production, the subsidy totals USD 3.2 billion yearly; based on the opportunity cost, if sold abroad, the subsidy stands at USD 26.2 billion, and based on the total cost plus taxes, it would be about USD 45.0 billion a year. That is, some 1%, 9% and 16%, respectively, of the Gross Domestic Product (GDP), as it were. To the best of my knowledge, the latter is the correct one, because the first one does not cover the opportunity cost of selling gasoline at world prices, and the second one does not take into account the environmental cost of an excessive consumption. (Precisely, taxes are meant to internalize the latter cost).

[Scuba]

1. Up is down, black is white, right is wrong.

[COLGATE4]

2. Well, you can't expect Chavez to let a little

economic problem like 45 billion or so a year get in the way of establishing the Bolivarian Empire (with Comandante at its head, of course).

[naaman fletcher]

3. At the expense of the environment, too

at the expense of the impoverishment of the meek.

[Bacchus4.0]

4. most definitely, where you see many smaller European or Asian cars in other Latin American

countries, gas guzzlers are common in Venezuela. Given I haven't been there in over 10 years now.