Venezuelan gasoline consumption patterns are shifting as a result of a new price differential at the pump, a trend that could diminish state-owned PdV´s imports and free up some supply for export.
Service station operators nationally are reporting increased retail sales of 91-octane gasoline, now priced at 1 bolivar/liter, and slowing sales of premium 95-octane, now priced at Bs6/l. Prior to the 19 February increase, both grades sold for nearly the same symbolic price, equivalent to less than a US penny per liter at the currency exchange rate on Venezuela´s unofficial market. Diesel prices remain unchanged at Bs0.046/l.
Historically, 95-octane gasoline accounted for about 70pc of PdV's local sales, and 91-octane for 30pc. In an interview yesterday with state-owned VTV television, energy minister and PdV chief executive Eulogio Del Pino said PdV hopes to flip those percentages as more drivers shift to the cheaper grade, freeing up premium gasoline for export.
Venezuela has been importing fluctuating volumes of finished gasoline and components from the US since around late 2011, according to data from the US Energy Information Administration.
Del Pino said Venezuela is currently consuming about 510,000 b/d of refined products, a figure that is off by almost 17pc from 612,000 b/d consumed locally in 2014, according to PdV's annual report for that year, a trend that apparently reflects the economy´s steep contraction in 2015.
The energy ministry and PdV have not yet issued 2015 operational and financial figures.
The revenue implications of the shifting fuel consumption pattern would be complemented by PdV´s plan to accept foreign currency for retail fuel purchases by Colombian drivers on the border. PdV's "special international service stations along the entire border with Colombia will collect in hard currency, dollars or (Colombian) pesos at the market exchange rate," Del Pino said. Gasoline prices at these stations will match gasoline prices in Colombia to discourage smuggling, he said.
President Nicolas Maduro shut Venezuela's border with Colombia on 19 August 2015 and has repeatedly vowed to maintain the closure until the Venezuelan military contains gasoline smuggling, drug trafficking and other criminal activities.
Local authorities in the Venezuelan border states of Tachira and Zulia tell Argus that the shutdown has disrupted legitimate commercial traffic, but large-scale fuel smuggling remains prevalent.
Venezuelan fuel costs a fraction of the price charged in Colombia, even after Venezuela´s recent price increase.
Food smuggling has declined considerably since the border was closed, but mainly because Venezuela has almost exhausted its food stocks and imports have almost dried up, the officials said.
The oil price collapse since 2014 has eroded most of Venezuela´s revenue.
Del Pino said all proceeds generated from local gasoline sales are allocated for the government's non-oil social programs. PdV in recent years was estimated to lose more than $12bn/yr on local fuel sales. It is not clear how the gasoline price hike will impact the company´s troubled finances.
"What we've done is reduce the subsidy, but Venezuela still has the world's cheapest gasoline prices," Del Pino said. "It costs only Bs40 to fill a passenger vehicle with 91-octane gasoline."
The Bs40 figure is equivalent to $4 for an average tank of gasoline at the new "essential goods" currency exchange rate Bs10/$. But it is only $0.20 for a tankful at the Bs202/$ rate in effect for everything else, including dollar-to-bolivar transactions by PdV. The black market rate is more than Bs1,000/$.
Del Pino said Venezuelans are "responding positively" to the pump price adjustment. Violent protests in Caracas greeted a retail price hike in 1989, preventing another price adjustment until the late 1990s, before last week´s increase.
Del Pino said PdV also plans to revive credit card-based retail fuel sales, a move aimed at addressing security concerns. "Service station employees are now handling daily cash volumes that are almost 60 times greater than was coming into the stations before, and criminals know this," an energy ministry official told Argus.
Venezuelan service stations are almost exclusively a cash-only business.
