Global oil prices zoomed up to $135 a barrel this past week. But that doesn't worry Roberto Morales, a 33-year-old Venezuelan businessman. Morales, who drives a compact Volkswagen Gol, still pays only $1.32 to fill up his car with 11 gallons of high-octane gasoline, thanks to Venezuela's subsidized fuel price. 'This is crazy but I'm not complaining,' says Morales. 'Gasoline here is cheaper than water.'
He's not exaggerating. Gasoline prices in Venezuela are the cheapest in the world—1/15 the price of a liter of bottled water, and 1/25 the price of a liter of milk. Since 1998, Venezuela has kept the price of gas fixed at 0.097 strong bolivars a liter, or about U.S. 3¢ (lower octane is 0.070 strong bolivars). That means that consumers pay about 12¢ a gallon, or 1/33 of what their U.S. counterparts pay.
Saturday, May 24, 2008
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Gasoline is too cheap in Venezuela.
ReplyDeleteAll subsidies should be removed, for starters. Then the government should start gouging the Rich with gasoline taxes. The poor OTOH should be subsidized -- not with cheap gasoline, but with getting more disposible income. They can spend part of that on the higher cost of gasoline.