Venezuela, the oil producer with the cheapest gasoline in the world, is considering raising the fuel’s price as part of wider economic policies to boost government revenue.
“There have to be large debates in Venezuela about the price of gasoline and we will open this up for discussions with the entire country including organizations and private companies,” Venezuelan Vice President Jorge Arreaza said yesterday in an interview with Venevision TV.
Octane 95 gasoline costs 0.097 bolivars a liter ($0.06 a gallon) at the official exchange rate and $0.01 a gallon at the black-market rate, the cheapest in the world according to data compiled by Bloomberg. Venezuela loses approximately $1.4 billion a year to gasoline trafficking to Colombia, Oil Minster Rafael Ramirez said on Aug. 2. Gasoline across the border is as much as 7,000 percent higher than in Venezuela.
“The measure would certainly help the economy, reducing gasoline imports and improving the budget,” David Smilde, a sociology professor at the University of Georgia who specializes in Venezuela, said in telephone interview today. “Even doubling or tripling the price probably wouldn’t make a dent in people’s wallets.”
The domestic market is consuming almost 700,000 barrels a day of oil, Ramirez said in October. In recent years Venezuela has increased imports of gasoline components including MTBE amid stagnant oil production and continued operational issues at its domestic refineries,which have reduced output.
Venezuelan President Nicolas Maduro, whose party won 44 percent of the vote in mayoral elections this week, may use his political capital to take tough economic measures such as raising the price of gasoline and devaluing the currency, said Smilde.
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