In Venezuela, The Only Way to Cheap Gas Is Through Big Brother

(Bloomberg) -- Carlos Ribas put it off as long as he could. He had no interest in the government handouts, the holiday cash bonuses, the dirt-cheap groceries, the discounted medical care, none of it.

Then President Nicolas Maduro declared that Venezuela’s extraordinary subsidies for gasoline and motor oil will soon be available only to holders of the Carnet de la Patria -- the Card of the Fatherland. Everyone else will pay “international prices” for what has long been the cheapest petroleum in the world, so cheap it’s essentially free.

That was it for Ribas, a 49-year-old technician whose van is a gas-guzzler and swallows a liter of oil every month. “I have to do it,” Ribas said after two hours in line to sign up for the offending item in Caracas. He shook his head, looking pained. “I don’t have any choice.”

It would seem to be a no-brainer to go to the trouble of queuing up for a card if you own a car. It’s also the ticket to the array of benefits the Maduro forces dole out. But for Ribas and many others, the little rectangle is laminated proof of the socialist regime’s Big Brother reach. To them, the simple act of carrying it suggests support for the Chavistas and Maduro, whose policies have wrought crippling inflation and ruinous shortages.

“I will never enroll -- never, ever -- even if I have to pay in English pounds for a liter of gas,” said Xavier Rodriguez, 66, a producer at an advertising firm in Caracas. He’s convinced, he said, that the government is up to no good with the data collected when the cards are tapped. “I will never ask for anything from this corrupt government.”

International Prices?

The petroleum switch-up is one of many measures Maduro is implementing in an attempt to bolster the collapsing economy. The Aug. 20 devaluation and redenomination of the bolivar was intended to restore the currency’s buying power and tackle inflation, which Bloomberg’s Cafe Con Leche Index shows is running at an annualized rate of more than 1 million percent.

It’s unclear how the new program will work. The country’s 8,000 service stations don’t accept credit or debit cards and so aren’t equipped with technology to scan the cards. There’s also no indication what Maduro meant by international prices -- whether that’s the 80 cents a liter goes for in Colombia, for instance, or the 34 cents it does in Ecuador. He did say in a recent speech that there will be a “trial phase,” though he didn’t indicate when it will start.

Right now, filling an entire tank in Venezuela costs the equivalent of fractions of a penny; the smallest of the new currency, a coin worth half-a-bolivar, will pay to fill a sedan’s tank more than 100 times.

Cookie For Gas

Since cash is a scarce commodity, service-station attendants will often be handed a cookie or a cigarette as thanks. If you’re out of both treats and bolivars, the nice ones will just wave you on your way.

Across Venezuela, more than 15 million people, or about half the population, have fatherland cards. Many might starve it they didn’t. The monthly minimum wage, the equivalent of $1 at the black-market rate, pales next to the benefits that come with the card, including deeply discounted food including beans, tuna and rice. (The new minimum that goes into effect Sept. 1 will be worth about $20.)

Why add subsidized gasoline to the fatherland-card list? Maduro’s explanation in an Aug. 13 speech was that higher prices paid by some would stop smugglers from reselling ultra-cheap fuel in neighboring countries. That’s possible; at the least, fewer Venezuelans buying fuel for next to nothing would mean more oil for Petroleos de Venezuela to sell on the world market, bringing the country desperately needed hard currency.

Red Points

Francisco Monaldi, an expert on Latin American energy at Rice University in Houston, sees something more sinister -- “a form of political and social control that is totally discriminatory.’’

Maduro’s real message is that people have to get with his program and behind his United Socialist Party of Venezuela, Monaldi said. “If you want to receive subsidies, you have to comply with what we tell you to do. Otherwise, you will live in a free-market economy where prices are extremely high.’’

Critics have raised the alarm about the card before, including during the presidential election in May. Kiosks called Red Points -- red being the color of the party and of the late Hugo Chavez -- were set up near polling stations. Voters were asked to scan their fatherland cards and questioned about their jobs and what government programs they use. The implication was that there was a tit-for-tat. The election, which the government said Maduro won with 68 percent of the vote, was condemned by the U.S., the EU and others as rigged.

The Red Points solidified Rodriguez’s resolve. “There’s something behind this card,” he said. “It’s being used for control.”

--With assistance from Andrew Rosati.

To contact the reporters on this story: Fabiola Zerpa in Caracas Office at fzerpa@bloomberg.net;Patricia Laya in Caracas at playa2@bloomberg.net

To contact the editors responsible for this story: Daniel Cancel at dcancel@bloomberg.net, Anne Reifenberg

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