VENEZUELA: Carrying coals to Newcastle ... Gasoline IMPORTS almost double

Caracas Daily Journal (Jeremy Morgan): It's a sign of shortcomings in Venezuela's downstream capacity in the oil sector that underpins everything else in the country. Venezuela is the biggest exporter of crude oil in Latin America, but it also imports fuel oil, gasoline and additives simply because it doesn't produce enough of these at home.

With the economy improving and living standards rising -- for which, in this context, read prosperous upper income people buying another new four-wheel drive status symbol and going for a gas-guzzling ride -- demand for gasoline is on the rise, too. Fuel oil is mainly used for electricity generation or industrial purposes, and additives enhance the quality of gasoline.

The Venezuelan Central Bank (BCV) says the value of imports of the three petroleum products all but doubled during the first quarter of this year compared with the same period in 2007.

The cost of importing these products jumped 98 percent to $1.595 billion in the first quarter, while the increase in the volume of shipments was more modest. Such is the reality of relaying on imports in the midst of booming world oil prices. A year before, first quarter imports of these products cost $802 million. By the final quarter of last year, the three-month bill had reached $1.3 billion.

The BCV attributed the increase to rising demand in an improving economy ... but it was also noted that until an unexpected increase of 3.3 percent in the first quarter of this year, domestic oil output had dropped during four consecutive quarters.

While production rates rose in the first quarter, crude oil exports fell by 2.1 percent on a year before to 2.79 million barrels a day (b/d). This implied there was an extra 162,000 b/d to fill in gaps in the domestic market, but this obviously wasn't sufficient to cope with rising consumption. The central bank dryly commented that a 20 percent rise in overall imports in the first quarter wasn't solely due to shipping in key food items such as milk, meat, fish and cooking oil.