Trading Jenga: Is Gasoline Venezuela’s Tipping Point?

What is the nexus point of 6000% gasoline prices, 120% inflation, 40% currency deflation, electricity shortages, and a 20% minimum wage increase in Venezuela?

Caracas mobs have stolen food and rioted as shortages cripple this amazing Latin city. Police and soldiers fired tear gas at large crowds of protesters in the streets. The military and police side with Maduro for the moment.

In socialist countries, is there a role for the United Nations and humanitarian aid in Caracas? What pushes the outside world to step in and help Venezuela? The October 2016 bond payment and its probable default predicts additional financial crisis ahead.

Venezuela has experienced power outages for several years, and several have impacted Caracas and its 28 million people. Is war ahead?

Recently Venezuela’s government requested 100 malls to close or generate their own power during four peak load hours from 1pm to 3pm and from 7pm to 9pm. This load management attempt will help the country deal with lower electric output from hydroelectric plants caused by El Niño droughts. Electric prices are artificially low which causes load management issues. Electricity rationing is serious business for any country.

Venezuelan President Nicolás Maduro raised fuel prices in Venezuela for the first time in about two decades, while simultaneously devaluing currency to stabilize the country’s economic crisis. Gasoline prices will increase from 0.097 bolivars to 6 bolivars or 6,086% for 95 octane gasoline and 1,300% for 91 octane gasoline. The Venezuelan official currency exchange rate tied to food and medicine imports will become 10 bolivars per dollar from 6.3 and its’ second exchange rate will float. The inflation rate in 2015 was 140%. On March 1st, the minimum wage will increase about 20%.

How do local gasoline market changes impact the international refined trading market? Is this new price below the international market? If so, will exporters try to take local priced oil and sell in nearby Colombia, Panama, Cuba, or other Latin countries? Vice versa? How can local price spikes increase violence on the ground to a level of hurting the Venezuelan energy markets?

Oil rich countries have often built false economies for their home country. Two decades without price hikes created unreal expectations for energy prices at home. Four factors contributed to this problem: inflation, currency weakness, oil production levels, and oil price volatility.

Refined energy prices in Venezuela will rise overnight in a manner which could spark violence and a new walking population. Is this an expansion of the lower income class? A disproportionate amount of income will go to gasoline, leaving many without money for food and medicine.

© 2016 All Rights Reserved Rebecca Stone

Dr. Rebecca Stone earned a MBA in Finance from the University of St. Thomas in Houston, a Masters Degree from the Texas Health and Science University in Austin, BBA from the University of Texas at Austin, and a foreign Medical Degree in Alternative Medicine. Her writing includes 70 book and product reviews and three hundred articles in the field of medicine and alternative medicine. She has written three medical books available online. SpeedyReads publishes book written by Dr. Rebecca Stone including The New Drone Juggernaut ©2015, Quantum Brain Healing ©2011, Quantum Orthomolecular Medicine ©2011, and Horny Goat Weed, the Magic Chinese Herb ©2015. The most recent book will be available in Spanish in the near future at Barnes & Noble.

Her current status at AMAZON for the Kindle book Horny Goat Weed, the Magic Chinese Herb ©2015 reached the top 5% of paid book sales for it’s medical category. Dr. Rebecca Stone also wrote The Undersea Adventures of Aladin and Alibaba. See more of her work at

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