Oil’s New Doping Scam: It Ain’t Honest But It’s Much

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A recent article in Bloomberg gave us a peek at the newest oil industry scam, and it sounds a whole lot like cheating at sports: doping. The concept isn’t that different. By adding chemicals to embargoed oils, they get off on a technicality and create “new” oil that can pretend to not be subject to embargoes.


Image courtesy U.S. Coast Guard

It all starts off with US embargoes against Venezuela. The US government and some others put sanctions, including oil embargoes, against Venezuela after seeing an increasingly illegitimate government ratchet up the mistreatment of its people. This culminated in the installation of a non-elected government about two years ago.

While the Venezuelan government wants to blame sanctions for its people’s economic problems, there’s a bipartisan consensus in the US and wide consensus in democratic countries that sanctions issued both under Presidents Obama and Trump were not the cause of the economic suffering that plagues Venezuela. They had already been going for years, and are largely caused by corruption and mismanagement by the government.

Whole books can be written about what’s been going on in Venezuela, and you can get up to speed on Wikipedia. Suffice it to say, the embargo isn’t part of a western plot to oust good socialist leaders who care for their people. The idea is to starve the regime out and hopefully the country can end up with legitimately elected leaders who don’t cause suffering.

Most recently, court battles have continued over the sale of Citgo’s shares and assets to pay for property taken by nationalizations in Venezuela.

Running The Embargoes

Needless to say, there’s great motivation to find buyers for Venezuelan oil. While the US can prohibit US companies from buying their oil, Washington can only put pressure on foreign companies dealing with their oil, mostly by prohibiting US companies from doing business with them. For that reason, it’s important for most foreign companies to not be seen buying or selling it.

There are a variety of games buyers and sellers can play to keep the US government from knowing where the oil went. One trick is to have ships meet at sea and pump the oil from one ship to another while nobody’s looking, which can often thwart tracking. Mazes of shell companies to sort through, disabling transponders, and many other tricks can be used to shuffle the deck and facilitate smuggling around the embargo.

Oil Doping

The latest scam Chinese buyers are pulling is to “dope” the oil. Ships known to be carrying Venezuelan oil sometimes meet with other ships that pump chemical additives into the tanker. The difference is minor, but it’s enough to semi-legally change the labels on the oil. “Hamaca Crude” from Venezuela becomes “Singma Blend.”

It’s perfectly legal to add chemicals to oil, as it sometimes needs to be brought into spec for its intended use, and not all oil is the same. What’s illegal is disguising the place of origin.

The next step is to go into port without the original paperwork, but only with new paperwork claiming the “blend” was purchased from the dopers, negating any origin in Venezuela. It’s not completely legal to do this, but it’s difficult to determine what actually happened after the fact, especially if someone isn’t motivated to do so.

Bloomberg found a number of questionable invoices and tracked some of the smuggling and doping to transactions by Swissoil Trading SA. When confronted about this, the company said, “Swissoil Trading SA is not marketing and has not marketed crude oil from Venezuela.” While technically true (Swissoil bought and traded “Singma Blend”), the truthfulness is only salient when kept out of context.

Bloomberg went on to point out that Chinese buyers have been picking up more and more of Venezuela’s oil in this fashion, with just about all of it going there by the end of last year. While Venezuela’s heavy oil is tougher to process, it comes at a steep discount, so smuggling it can be quite profitable.

What We Can Learn Here

While it’s popular to slam the oil industry for its capitalism, there’s a free market perspective that isn’t so great for them. They’re so used to getting special favors from government due to the need for cheap oil and cheap gas that they’re not used to making an honest living like the rest of us.

The subsidies, special treatment, and seemingly endless support from conservative and liberal politicians alike have created the monster, and now nothing is ever good enough. They always want more and will do anything to get it.

Oil traders are perfectly comfortable enabling authoritarian regimes that starve and oppress their people. They’ve been in bed with dictators for over a century, after all. What’s one more dictator?

On the surface, free market capitalism might seem to favor buying oil from anyone and selling it to anyone, the Venezuelan government is dealing in stolen goods. They dissolved legitimate parts of their government when popular opposition led to the ruling machismo losing control of them. They’ve nationalized whole industries, stealing the property of the oil traders’ fellow capitalists and then squandering the value with corruption and wastefulness.

The true adherent to free markets would realize that governments that behave like Venezuela are like a cancer that can kill the whole capitalist system if it spreads. And I’m not talking about nice Nordic or Bernie Sanders/AOC-Style socialists who care about their people taking over the system. Maduro and his cronies have created nothing but suffering for the people they violently oppress.

They’re smuggling oil and supplying funds to a government that’s socialist and caring in name only, but fascistic and anti-democratic in reality. Real socialists who care about what happens to the people have nothing in common with the people this oil smuggling benefits.

Sure, one can make a quick buck doing business with the devil, but in the end, it costs you your soul. There’s no good future for the oil traders if the disease of Madurismo spreads to other places globally.

The best thing we can do for the world and Venezuela’s people is use renewables to pull the rug out from under dictators who survive on oil. It’s harder to make a dishonest buck with electrification because the people are ultimately in control of it. You can buy electricity from the utility, generate it yourself on a rooftop, and even demand choice from your utility when it comes to the sources of your energy.

Diversity and local control are bad for dictators and good for the environment. Cleantech gives people the tools they need to preserve freedom and dignity. We can never have too much of that.

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Jennifer Sensiba

Jennifer Sensiba is a long time efficient vehicle enthusiast, writer, and photographer. She grew up around a transmission shop, and has been experimenting with vehicle efficiency since she was 16 and drove a Pontiac Fiero. She likes to get off the beaten path in her "Bolt EAV" and any other EVs she can get behind the wheel or handlebars of with her wife and kids. You can find her on Twitter here, Facebook here, and YouTube here.

Jennifer Sensiba has 1770 posts and counting. See all posts by Jennifer Sensiba