Gasoline Prices Hiked To 60 US Cents Per Liter
When it comes to the recent dramatic decline in the price of oil, no country has taken it harder on the chin than Venezuela.
Prior to the spike down in the price of oil, Venezuela was already operating on the razor's edge when it came to their finances. Now, with oil declining precipitously from its $100+/barrel peak, Venezuela finds themselves quickly running out of cash and time.
One thing that Venezuela always had going for it - dirt cheap gasoline prices. Prior to this week, a liter of high quality gasoline in Venezuela cost between 1-3 US cents. On Wednesday, President Nicolas Maduro revealed that the cost of a liter of gasoline would be hiked by roughly 6,000% to 60 US cents. Regarding the move, Maduro said that "the time has come for us to create a system that guarantees access to gasoline at fair Venezuelan prices but that also guarantees payment for what is being invested to produce the gasoline and the functioning of Petroleos de Venezuela".
Venezuelan government officials note that the country will still have the lowest gasoline prices in the world, even after the 6,000% price increase.
As mentioned, Venezuela's finances were already in disarray even prior to the decline in the price of oil.
Things went from bad to worse for the country after the bottom fell out of oil. OPEC, led by Saudi Arabia, elected to maintain production quotas in an effort to crush the burgeoning shale oil industry in North America. While the move has certainly put many major oil companies under extreme duress, it has already created havoc for countries such as Venezuela, who has the largest proven oil reserves in the world and counts oil as 95% of their total exports.
Venezuela, which has taken to selling off its gold reserves in an effort to stay afloat, is one of the countries who has been clamoring for an emergency OPEC meeting to address the price of oil. Other countries who are seen as very vulnerable to low oil prices include Libya, Iraq, Nigeria and Algeria. All five countries have experienced a very negative impact from OPEC's decision to try and eliminate some of their competition in the oil extraction market.
The gasoline price increases in Venezuela haven't gone into effect yet. It will be interesting to see the impact on the country, which is already in the throes of a significant recession.
Source: CNN.com - Venzuelans Face a 6000% Hike in Gasoline Prices
Filed under: General Knowledge