Taxi driver Jaime Tinoco works the streets of Caracas in a 1976 Chevy Nova
that guzzles 19 gallons (72 liters) of gas a day. But he doesn't worry about
fuel efficiency -- filling his tank costs just $2.30.
While US consumers struggle with soaring energy prices, Venezuela's gas is
now the world's cheapest at 12 cents a gallon and Washington's regional foe,
President Hugo Chavez, vows to maintain subsidies that keep fuel dirt-cheap.
Flares burn at an oil refinery in the St.
Bernard Parish of New Orleans, Louisiana on October 19, 2005. Oil refiners
are not conspiring to keep gasoline prices high and are not overcharging
consumers for motor fuel, the industry's trade group told Congress on
Thursday. [Reuters] |
"Those gringos have everything -- so why does their gas cost so much?" asked
Tinoco between chuckles as he navigated a midday traffic jam. "Don't they have
oil reserves?"
Chavez, a self-proclaimed socialist and critic of President Bush, has even
begun subsidizing fuel for poor U.S. neighborhoods as U.S. consumers brace for
average summer gas prices of $2.71 a gallon -- 34 cents higher than last summer.
In Venezuela, the world's No. 5 oil exporter, drivers fill their tanks for
less than the price of a cheap breakfast, and love to point out that gasoline
costs less than mineral water.
The nation's gasoline is now the world's cheapest, according to an
International Monetary Fund report released in April that shows Venezuelan gas
prices as about a third of those in oil-producing giant Saudi Arabia.
Shiny SUVs and rusty 1970s-era sedans share the streets of Venezuelan cities
as drivers shrug off fuel costs.
Low-priced fuel is considered a birthright in Venezuela, which sells 1.2
million barrels per day of oil to the United States -- the world's biggest gas
guzzler.
"Gasoline should stay cheap the way it is, that's why we have oil in
Venezuela," said Maria Rosa Pinero, 55, a housewife, filling up a Volkswagen Gol
at a gas station in eastern Caracas.
Chavez has extended Venezuela's fuel subsidy to poor Americans through a
well-publicized jab at the U.S. government that offers 40 percent discounts on
heating oil distributed by Venezuelan-owned refiner Citgo.
Flush with cash from high oil revenues, Chavez has also shored up regional
alliances by providing low-priced fuel to Central American and Caribbean nations
he says have been snubbed by the United States.
'HOOD ROBIN' SUBSIDY
Venezuela's gas subsidy is the subject of endless grumbling by economists who
say it promotes consumer waste and costs the state billions of dollars in lost
revenue.
Critics say the subsidy largely benefits middle and upper-class vehicle
owners at the expense of government income that could be spent on the poor.
"They call it the 'Hood Robin' subsidy," said Jose Luis Cordeiro, a petroleum
engineer who writes about energy issues. "Instead of stealing from the rich to
give to the poor, it's the opposite."
He estimates Venezuela would have taken in at least an additional $8 billion
last year -- almost 8 percent of the nation's GDP -- if Venezuelans had paid
market rates for fuel.
The subsidy also encourages rampant fuel smuggling to neighboring Colombia
and leads to huge lines of Brazilian drivers waiting to fill up along the
southern border.
But past efforts to raise gas prices have not gone well. Authorities in 1989
raised fuel prices at the height of a recession, leading to three days of
rioting during which at least 300 people were killed. Human rights groups say
troops may have killed several thousand people.
The event marked a turning point in Venezuelan history, and served as
inspiration for Chavez -- at the time a young army officer -- to lead a coup
attempt three years later. The coup failed but helped propel Chavez into the
presidency in 1998.
Chavez has maintained popularity by channeling oil revenues toward social
programs for the poor, and has often criticized U.S. dependence on cheap
gasoline. Washington says he is using his oil wealth to threaten regional
democracy.
At Venezuelan gas stations, however, there are few complaints about low-cost
fuel or fuel efficiency.
"People buy a car because it's comfortable or because it's big," said Isidro
Rodriguez, 30, an accountant, as he filled up a new 4-wheel-drive Ford in
southern Caracas. "It's not for the price of fuel, because that's never been a
problem."
