Fearful of being robbed and scared of losing his place in a miles-long line for diesel, Daniel Trocel spent the entire night in his truck parked along the edge of a highway on the outskirts of Venezuela’s capital. As the sun rose on a recent morning, he prepared to spend much of the day waiting, too.
“I have been here for more than 26 hours,” said Trocel, who was anxious to get to his destination, where he’d be picking up bricks. “If the lines moves, I have to move before someone cuts in.”
“We are at the door of a real crisis,” said Leonardo Palacios, president of the Caracas Chamber of Commerce. “All of the country’s industrial production and all of the distribution of goods are dependent on diesel.”
“We spend more time at the service stations than in our homes,” said Julio Chacón, 31, lamenting that he doesn’t get to spend more time with his 7-year-old daughter, wife and ailing mother. He said the situation is worse outside the capital. “In other states, a driver can be forced to wait from four to five days up to 15 days.”
Marien Vielma, director of the Venezuelan Central Region Transportation Chamber, a trade association, said that drivers outside Caracas are often forced to wait a week and a half for their turn at a service station and that fuel distribution does not take into account the type of load carried or if it is perishable. She said communities are at risk of losing access not just to food but medicine and drinking water. Most of the cistern trucks that provide water to the country’s impoverished favelas also run on diesel.
“The country’s whole food supply is at risk,” she said. “Approximately 90 percent of the heavy load trucks that transport food and basic items consumed by the Venezuelan population are under a technical paralysis, as they are currently waiting in line to receive fuel.”
“Around 70 percent of the primary and secondary transport in the country requires diesel,” Palacios said. “That means that this situation could have a severe impact in the companies’ ability to produce and to employment.”
In a poll released in January by Fedecamaras, Venezuela’s largest business federation, 78.8% of companies consulted said they had been impacted by the dwindling supply of diesel, with most saying it has kept them from fulfilling business obligations.
The country was already in the throes of an economic contraction worse than the U.S. Great Depression before the pandemic hit. Between 2013, when Maduro took office, and 2019, the economy shrunk by more than 63%, according to the International Monetary Fund. Years of economic mismanagement and corruption, along with a drastic fall in oil prices, fueled skyrocketing hyperinflation that rendered many salaries nearly worthless.
More than 5.5 million Venezuelans have fled their country in recent years to escape what has been characterized as one of the worst humanitarian crises in the region, and after an initial slowdown in 2020, migrants are now on the move again, with hundreds leaving each day across the porous border with Colombia.
“Venezuela has gone from being a power house in world’s oil industry to playing a role of complete irrelevance,” said Juan Fernandez, former executive director of planning for state-run Petróleos de Venezuela, known by its Spanish acronym, PDVSA.
TRUCKERS DESCRIBE ‘NIGHTMARE’ ORDEAL TO GET FUEL
Venezuela was consuming the equivalent of around 140,000 barrels of diesel per day before the pandemic started, most used by heavy trucks and buses and as a secondary fuel source by the country’s thermoelectric plants.
Venezuela’s diesel output has fallen dramatically in the last two years, dipping from an estimated 80,000 barrels per day in December 2018 to just 28,000 in December 2019, according to PDVSA figures. To cover the shortfall, Venezuela began importing fuel from companies such as India’s Reliance Industry and Spain’s Repsol, Fernandez said.
“What the country is producing in diesel is now about 40,000 barrels per day, and if you were able to import what you had been importing before, about 40,000 barrels, then you would probably be at a point of equilibrium between supply and demand,” he said. “But since they are not able to import that deficit, then it was unavoidable for them to begin eating up their inventories, which are now at a very low levels.”
Despite being sanctioned by the United States, PDVSA had been able to import the fuel it needed through firms like Repsol and Reliance through swaps deals in which Venezuela would get diesel as payment in return for shipments of crude.
But the Trump administration put an end to the swap deals when it noticed that not all of the imported fuel was being used for Venezuela’s tractor trailers, said Russ Dallen, managing partner of investment bank Caracas Capital, whose firm tracks Venezuela’s oil flows.
“Despite of all their internal needs, they were sending fuel to Havana,” he said. “Even as they were saying that they had no gasoline in Caracas, Maduro was sending diesel.”