Gasoline price in Venezuela down to USD 0.01 upon devaluation

Annual subsidies in gasoline are estimated at USD 1.7 million

Oil Minister Rafael Ramírez expressed his disagreement over high gasoline consumption in Venezuela (File photo)

ERNESTO J. TOVAR | EL UNIVERSAL

Friday February 15, 2013 01:38 PM

No adjustment in the price of Venezuela's gasoline has been reported in 17 years. After several devaluations in such a long time, Venezuela's gasoline has turned out to be the cheapest in the world.

Upon the latest devaluation of the Venezuelan currency from VEB 4.30 to VEB 6.30 per US dollar, the value of a liter of gasoline of 95 octanes slipped from USD 0.022 to USD 0.015, based on the official foreign exchange rate.

In recent days, the Executive Office has intensified its discourse on the advantages of the devaluation of the bolivar. Although the measure implies a 3.3% reduction of the fiscal deficit according to the authorities, ministers of the economic cabinet have ascertained that the action is not for fiscal reasons.

Economists Luis Oliveros and Domingo Sifontes have explained that upon the 46.5% devaluation, subsidies in gasoline may account for USD 1.7 billion a year. This is just the result of production costs, which are 10 times the price of gasoline.

For his part, amid concerns about a rise in the price of gasoline, oil Minister Rafael Ramírez said that it had nothing to do with fiscal needs, but a particular "behavior related to the squandering of natural resources."

etovar@eluniversal.com

Translated by Jhean Cabrera

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