Socialism is causing Venezuela – with the world’s largest oil reserves -- to run out of gasoline

The popularity of socialism on America’s campuses and among a substantial fraction of Democrats defies the evidence of a natural experiment taking place in Venezuela, just across the Gulf of Mexico from America. Venezuelans already are starving due to socialism’s perversion of incentives. Food producers can’t make money under the price controls, expropriations and regulation of the socialists of Chavez and his successor Maduro, so they don’t produce food, and people must flee by the millions in order to stay alive.

Venezuelan refugees in Colombia (photo credit: Daniel Cima)

Now, the same process of perverse incentives is shutting down the very resource that made Venezuela the richest country in Latin American before socialism ruined it.  Fabiola Zerpa of Bloomberg reports:

Venezuela’s fuel shortages are worsening as mass resignations at the state oil company’s tanker fleet have delayed gasoline shipments.

Petroleos de Venezuela SA’s refineries are running at less than a quarter of their capacity, forcing the country to rely on imported gasoline.

Of course, foreign currency is in very short supply in Venezuela precisely because its oil production and refining output are collapsing, as incompetent political appointees screw up, and have no incentive to perform well. Because gasoline is regarded as so essential, Venezuela controls its price, further reducing incentive to produce:

 Gas prices are still the among the cheapest in the world, with the black market rate earlier this month less than one cent per gallon. Maduro has yet to increase prices after vowing to do so at the end of September.

Price controls always produce shortages, as rent control regulations (also beloved by American socialists) demonstrate. Price may be affordable, but there are no goods available.

Now, not just oil production and refining, but also transportation is collapsing under cronyism and perverse incentives:

Resignations and requests for leave by personnel at PDV Marina, the oil company’s shipping affiliate, are reducing the tankers’ crews to a minimum, according to a document seen by Bloomberg. At least 11 tankers are affected, and minimal staffing is hindering PDVSA’s ability to deliver on time, the document shows. Venezuela’s Oil Ministry and PDVSA officials declined to comment.

“Tankers are now delayed all the time,” PDVSA union leader Gregorio Rodriguez said from Puerto La Cruz.“The situation is worse in cities far from distribution centers, where the truck fleet service is also shaky, as is eastern Venezuela.”

God forbid, a tanker disaster is possible with minimal crewing and inexperience.

Adam Smith wrote, “There’s a lot of ruin in a nation.” Venezuela is demonstrating the process by which the ruin of a nation unfolds, as vital systems gradually shut down, poisoned by socialism.

Media favorite Alexandria Ocasio-Cortez, who speaks Spanish, has never, so far as I can discover, commented on the ongoing tragedy socialism is foisting on Venezuelans.  The Babylon Bee has satirized her silence, but our media progressives are not going to press her on the issue.

It’s time for the American left to explain why the tragedy of Venezuela will not happen here if their policies are enacted.

The popularity of socialism on America’s campuses and among a substantial fraction of Democrats defies the evidence of a natural experiment taking place in Venezuela, just across the Gulf of Mexico from America. Venezuelans already are starving due to socialism’s perversion of incentives. Food producers can’t make money under the price controls, expropriations and regulation of the socialists of Chavez and his successor Maduro, so they don’t produce food, and people must flee by the millions in order to stay alive.

Venezuelan refugees in Colombia (photo credit: Daniel Cima)

Now, the same process of perverse incentives is shutting down the very resource that made Venezuela the richest country in Latin American before socialism ruined it.  Fabiola Zerpa of Bloomberg reports:

Venezuela’s fuel shortages are worsening as mass resignations at the state oil company’s tanker fleet have delayed gasoline shipments.

Petroleos de Venezuela SA’s refineries are running at less than a quarter of their capacity, forcing the country to rely on imported gasoline.

Of course, foreign currency is in very short supply in Venezuela precisely because its oil production and refining output are collapsing, as incompetent political appointees screw up, and have no incentive to perform well. Because gasoline is regarded as so essential, Venezuela controls its price, further reducing incentive to produce:

 Gas prices are still the among the cheapest in the world, with the black market rate earlier this month less than one cent per gallon. Maduro has yet to increase prices after vowing to do so at the end of September.

Price controls always produce shortages, as rent control regulations (also beloved by American socialists) demonstrate. Price may be affordable, but there are no goods available.

Now, not just oil production and refining, but also transportation is collapsing under cronyism and perverse incentives:

Resignations and requests for leave by personnel at PDV Marina, the oil company’s shipping affiliate, are reducing the tankers’ crews to a minimum, according to a document seen by Bloomberg. At least 11 tankers are affected, and minimal staffing is hindering PDVSA’s ability to deliver on time, the document shows. Venezuela’s Oil Ministry and PDVSA officials declined to comment.

“Tankers are now delayed all the time,” PDVSA union leader Gregorio Rodriguez said from Puerto La Cruz.“The situation is worse in cities far from distribution centers, where the truck fleet service is also shaky, as is eastern Venezuela.”

God forbid, a tanker disaster is possible with minimal crewing and inexperience.

Adam Smith wrote, “There’s a lot of ruin in a nation.” Venezuela is demonstrating the process by which the ruin of a nation unfolds, as vital systems gradually shut down, poisoned by socialism.

Media favorite Alexandria Ocasio-Cortez, who speaks Spanish, has never, so far as I can discover, commented on the ongoing tragedy socialism is foisting on Venezuelans.  The Babylon Bee has satirized her silence, but our media progressives are not going to press her on the issue.

It’s time for the American left to explain why the tragedy of Venezuela will not happen here if their policies are enacted.