Venezuela President Nicolas Maduro told lawmakers last week he’s considering raising gasoline prices.
That might be a good idea.
It’s been two decades since the government last lifted state-set local prices, the result of politicians’ concern that the move could spark protests like those that swept across the oil-rich nation following an increase in 1989.
In the interim, a string of currency devaluations has pushed down the cost in dollar terms to levels that would seem implausible to consumers in other parts of the world, even after the recent oil tumble cut prices at the pump.
The CHART OF THE DAY shows it now costs about 0.2 U.S. cent (that’s right; one-fifth of a penny) to buy a gallon of gasoline in Venezuela, based on black-market currency rates. Expressed another way, you can get 482 gallons with just one dollar. That’s enough to drive a Chevrolet Silverado pickup truck from one end of Venezuela’s 1,740-mile-long Caribbean coast to the other six times.
It’s a perk the government may no longer be able to keep doling out to its citizens as the collapse in oil exports pushes the country to the brink of default.
“They are basically bankrupt” and “cannot afford” these kinds of subsidies anymore, Siobhan Morden, head of Latin America strategy at Jefferies LLC, said in a Jan. 23 interview.