A piece titled “Cheap Gasoline: Why Venezuela is Doomed To Collapse” was recently published on the Forbes website (20th February 2014) and given that one of the most controversial drivers in Formula One is sponsored by Venezuela’s state-run oil company Petroleos Venezuela (PDVSA), this could have a significant impact on this driver’s team and future opportunities.
The author (Mr Helman) writes: “Cheap gasoline is why the government of President Nicolas Maduro is doomed to collapse. He can’t raise gas prices meaningfully without setting off an even greater populist uprising than the one already wracking the capital. But without change, the Venezuelan economy and its state-run oil company Petroleos Venezuela (PDVSA) cannot last long.
In order to finance fuel subsidies and other social spending, PDVSA has borrowed massively. According to PDVSA’s statements, its debt has increased from $15.5 billion in 2008 to $43 billion now. Venezuela’s biggest creditor is China, which has reportedly loaned the country $50 billion since 2007. China is not interested in getting Venezuelan bolivars; it insists on being paid back in oil — about 300,000 bpd worth of oil. Paying China its oil knocks PDVSA’s saleable supply down to 1.4 million bpd”.
Granted, sponsoring a Formula 1 driver is pittance in comparison to the company’s debt but PDVSA might have to re-consider its association with the glamorous high-octane sport of F1, when the number of Venezuelans below the poverty lines starts increasing again, and the riots and murders persist.