Use of diesel fuel in Venezuelan power plants jumped in March to a record 66,000 barrels a day, up 33% year over year, increasing the opportunity costs of lost diesel sales.
The fuel was used to keep the country’s lights on as hydro dam managers cut power generation 5% to save water after a drought. Conservation programs imposed by the government had little effect, as year-over-year electricity use fell only 1.5% year over year. Electricity use rose to 316 gigawatt-hours a day in March from 303 in January and 309 in February.
The opportunity cost — the money not earned by a dealer that dips into his stash — of diesel consumption rose by about $1 million a day to $7.5 million a day in March, the highest since soaring diesel prices in 2008 meant Venezuela was temporarily sacrificing as much as $9.3 million a day by burning diesel in power plants.
Use of fuel oil fell slightly from February to 54,000 barrels a day, still 11 percent higher than a year earlier. The opportunity cost of fuel oil is lower, as it is a less valuable substance.
If Venezuela reaches the 100,000 barrels a day forecast by the energy ministry in a document that Reuters got a few months ago, and spot diesel prices remain around the $2.89 a gallon seen at the beginning of March, Venezuela will be sacrificing $11 million a day by burning diesel in power plants rather than exporting the fuel.
This can be seen as a lot of money: $10 million a day could build a lot of nice schools, or import a lot of water-heater timers and water-conserving shower-heads. Or it can be seen as less than 1% of GDP, an insiginificant sum compared to the instability that would result from widespread blackouts.