How far can Venezuela go in raising price of world’s cheapest gas?

CARACAS: In Venezuela’s inflation-hit economy, a single US dollar can buy 3.5 million liters of gasoline – an absurdity that the government says it will tackle with a hike in the cost of state-subsidised fuel.

But just how far can President Nicolas Maduro go without getting his fingers burned?

Maduro announced on July 29 plans to adjust the price of gasoline and regulate sales based on the so-called ‘fatherland card’, an electronic card that provides access to subsidies. As a first step the government began a census of motor vehicles, set to end on Sunday.

A liter of 91-octane gasoline currently costs one bolivar, while 95-octane gas costs six. By contrast, a single egg in Venezuela’s hyperinflation ravaged economy - estimated by the IMF at one million per cent in 2018 - costs 200,000 bolivars.

A dollar on the country’s black market is currently trading at 3.5 million bolivars.

Experts say the retail price of gasoline covers just between two and four per cent of its cost of production.

Maduro has kept details of the fuel price adjustment under wraps, but he said that “we are paying to throw it away ... we need to move to a rational usage.” — AFP