For Venezuela, the magic land of cheap gas, a big hike


Henry Duran fills the tank of his 1978 Ford LTD Ranger at a gas station in Caracas, Venezuela, on Dec. 21, 2013. The loud, steady roar of gas guzzlers is sounding a little less muscular these days on the smog-filled streets of Caracas. (Fernando Llano/Associated Press)

Gasoline is so dirt-cheap in this country that the comparison undervalues dirt. Or, for that matter, almost any other element Venezuelan drivers can think of.

“It’s cheaper than water,” said one motorist, pointing out that bottled water costs far more than the 95-octane gasoline gushing into his Ford Explorer.

“Cheaper than air,” said the driver of a Chevy Tahoe, after paying more to fill a tire than the tank.

“The cheapest in the world,” a third SUV owner boasted. “We could wash our hands with it.”

And why not? Venezuela sits atop the world’s largest oil reserves, and its government sets the price of premium gasoline at about 5 cents a gallon. Its real price — adjusted to the soaring street value of the U.S. dollar — is half a penny per gallon.

Where gas is cheapest worldwide

Unlimited access to virtually free gasoline has become something of a Venezuelan birthright over the years, and raising prices is considered the third rail of Venezuelan politics. Deadly riots broke out in 1989 at the mere possibly of a price hike. Not even Hugo Chávez, who died last March after 14 years in power, dared to mess with the pumps.

But with annual inflation topping 50 percent and the government burning through hard-
currency reserves at a furious pace, Chávez’s handpicked successor, Nicolás Maduro, appears to have no choice. The government is spending more than $12 billion a year to subsidize domestic gasoline sales, Venezuelan energy officials say, and the gravy train is coming off the rails.

The projected price hike is likely to push gas closer to 17 cents a gallon, at unofficial exchange rates.

Global energy surveys rank Venezuela’s proven oil reserves at nearly 300 billion barrels — even bigger than Saudi Arabia’s. Venezuela is the world’s 13th-largest producer, and 40 percent of its shipments go to the United States, despite more than a decade of strained relations.

Maduro said that he favors a gradual price increase and that Venezuelan drivers deserve continued access to cheap gas because of the country’s hydro­carbon bounty.

“But it has to be an advantage, not a disadvantage,” he said. “What converts it into a dis­advantage is when the tip you give is more than what it cost to fill the tank.”

The near-freebie prices amount to an especially generous giveaway to Venezuelans fond of large SUVs and gas-
guzzling jalopies from the 1970s and ’80s. Although fuel costs almost nothing, cars are in short supply and extremely expensive because of Venezuela’s currency controls, keeping once-grand American pleasure boats on the road long after they have dis­appeared elsewhere.

“I love this car,” said Luis Fretas, owner of a baby-blue 1981 Chevy Malibu, insisting that it “gets great mileage.”

Among the middle-class and well-to-do Venezuelans who widely despise the socialist government, there appears to be broad consensus that pump prices are an aberration. At a state-owned gas station in Caracas’s upscale Las Mercedes neighborhood, where the Texaco signs have long since been replaced by patriotic murals depicting oil derricks, tankers and national hero Simón Bolívar, no one would defend gas prices so low.

“Sure they should raise them,” businessman Gilman Flores said after topping off his Toyota FJ Cruiser for less than the cost of a candy bar.

Asked about the oversize tires on his vehicle, he admitted that they were not for off-roading. It was a city car.

But that was beside the point.

“What Venezuela really needs to do is stop giving oil away to other countries like Cuba,” Flores said, echoing criticism from members of Venezuela’s opposition who argue that the country should cut off subsidized oil shipments to Havana and other leftist political allies before jacking up pump prices at home.

Political timing

An increase represents a risk for Maduro, who was narrowly elected last April and hasn’t been able to lower spiraling inflation or end shortages of household staples such as milk, flour and sugar. Because there are no federal or local elections scheduled this year, analysts say, the timing is right for Maduro to make politically unpopular moves.

“He’s up against the wall,” said Pedro Mario Burelli, a former board member of Venezuela’s national oil company, PDVSA, noting that the country is paying more and more to import components needed to make gasoline, making the subsidies “increasingly painful” for the government.

Burelli, a private consultant based in the United States, helped implement the last price increase in Venezuela, in 1996. That time, there was little controversy. “No one even remembers it,” he said. “All we did was plan transitional prices on public transportation.”

Many drivers here say gas prices are so low that even a large hike wouldn’t register in their wallets. They know that their cheap gas fosters pollution, traffic, contraband fuel smuggling across the Colombian border, and a wider culture of waste and inefficiency.

Far more worrisome are the eroding public safety and sky-high murder rate in this country of about 30 million.

Maria Osorio, the owner of a small, fuel-efficient hatchback, said that the extra mileage is nice but that she has another reason for preferring a modest car. “I have an SUV at home, but I’m too afraid to take it out because I might get carjacked,” she said, explaining that she has been robbed at gunpoint five times in the past two years.

Still, steeper prices could fall more heavily on Venezuela’s poor if increased transportation costs for food are passed along to consumers. The government says it won’t raise public transportation prices, but many low-
income Venezuelans get to work on buses owned by private companies that would probably raise fares.

It was bus fare increases that originally sparked the rioting of 1989 known as the “Caracazo.” Hundreds were killed, and the bloody episode helped launch the political career of Chávez, then a young paratrooper, who would cite the episode as an inspiration for his attempted coup three years later.

The attempt failed, but Chávez won the presidency in 1998 and kept gas prices frozen. Gas stations don’t even bother displaying them.

“A Priu?” said one gas station employee, asked whether he’d ever seen a Toyota Prius. “Never heard of it.”

‘Gas is too cheap’

Almost-free gasoline is just one element of the “magical” state engendered by Venezuela’s oil-warped economy, said historian José Bifano of Venezuela’s Central University. “Chávez was very clear about the political costs of raising gas prices,” he said. “Now Maduro is willing to take the risk, and the big question is how people will react.”

That will depend, said cabbie Jhonny Lozano, on how fast and how much the price goes up. “I think people know gas is too cheap,” he said, while cautioning that a price increase to 17 cents a gallon would be “too much.”

The taxi sign on his battered brown 1983 Chevy Celebrity was held loosely to the roof by a bungee cord. Lozano said he had no interest in trading the car for something more fuel-efficient.

“I have four kids,” he said, pointing to the Chevy’s roomy back seat, “and they all fit in there.”

Emilia Díaz-Struck contributed to this report.

Nick Miroff is a Latin America correspondent for The Post, roaming from the U.S.-Mexico borderlands to South America’s southern cone. He has been a staff writer since 2006.
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