Do you know how much Venezuelan car owners pay for gas today? Five cents for a gallon of fuel or just under 1 euro cent (€0.0096 to be precise) per liter at the official exchange rate, or according to an Associated Press report cited by the Detroit news, "less than a penny [1 U.S. cent a gallon] at the widely-used black market rate".
As an oil producer, Venezuela can offer gas at these absurdly low prices, but it comes at a cost for the government during an economic crisis.
Now, after some two decades of frozen prices at the pump, the newly elected government of President Nicolas Maduro is pondering an increase. However, that's easier said than done in a country where cheap fuel is considered a birthright, and let's not forget that the last time officials attempted to raise prices in 1989, the move sparked weeklong clashes resulting in the deaths of hundreds of people.
Maduro, a former bus driver, has been testing the waters for an increase in gas prices to fuel the battered economy, as it is reported that the gasoline subsidy costs more than $12.5 billion a year in government income.
“As an oil nation, Venezuelans should have a special price advantage for hydrocarbons compared to the international market,” Maduro told mayors on December 18. “But it has to be an advantage, not a disadvantage. What converts it into a disadvantage is when the tip you give is more than what it cost to fill the tank.”
Whether Maduro will be able to pass on an increase without triggering a violent response from the opposition and the people who are already being pressed hard by 54 percent inflation and a falling currency, remains to be seen, but he does have some time in front of him as elections aren't scheduled before 2015.
Another issue that (partially) stems from the extremely low gas prices is pollution, as many Venezuelans never felt the need to opt for more fuel-efficient and greener transportation modes, holding onto American behemoths from the 1970s, such as Dodge Chargers, Chevrolet Malibus and Ford LTDs. An interesting video from Venezuela's American car culture, courtesy of the New York Times (NYT), follows below.
Opening screen shot: NYT video