Venezuela Raises Fuel Prices and Enables Private Gas Stations

RIO DE JANEIRO, BRAZIL – A new fuel price system has come into force in Venezuela. Fuel prices, traditionally the cheapest in the world, are being raised. As an innovation, private petrol station operators are now allowed to import petrol and sell it in foreign currency.

To date, fuel has been supplied to the population in the world’s most oil-rich country virtually free of charge. In 2018, the German news agency DPA wrote that with one euro one could “go for a coffee or fill up 20,000 mid-range cars” in Venezuela.

Recently, partly because of ever tougher sanctions imposed by the USA on Venezuela, fuel at official filling stations in the South American country remained ridiculously cheap, but increasingly scarce. On the black market, fuel was traded for up to US$2.50 per liter.

Since June 1st, new price regulations have been in place. Private vehicles may fill up to 120 litres of fuel per month at a price of 5,000 bolívares (approx. US$0.025) per liter, and motorcycles may fill up to 60 liters at the same price.

Beyond that, the “international price” of US$0.50 per liter will apply. Local and long-distance public transport vehicles and trucks will be supplied fuel at the subsidized price for at least 90 days.

In addition to the state-owned oil company PDVSA, private companies will now be allowed to operate some 200 filling stations and sell fuel for US$0.50 (or the equivalent in the Venezuelan crypto-currency Petro). These petrol stations are also allowed to import gasoline from abroad.

The Venezuelan government hopes to circumvent the US blockade, which threatens foreign companies with severe penalties should they sell fuel to the Venezuelan state or PDVSA. “I hope the US government will not persecute entrepreneurs’ ships,” said President Nicolás Maduro, referring to the blatant threats with which the US recently escorted a fuel shipment from Iran to Venezuela.

A further consequence of the new fuel market regulations in Venezuela is likely to be a reduction in smuggling. The extreme price differences with neighbouring countries, particularly Colombia, have for years represented an uncontrollable incentive for the illegal export of this energy resource.

Opposition politician Juan Guaidó, who has been trying to topple the government with US backing for a year and a half now, described the new price structure as a “criminal measure”. According to Guaidó, it is “one of the hardest blows dealt to the Venezuelan people”.

However, President Nicolás Maduro stressed the need to maintain subsidies to cover basic needs. “These are extraordinary measures that are required to normalize the situation given the persecution and the imperial blockade,” said the head of state, who asked the people for “understanding and support”.

Fuel price increases have always been a highly sensitive political issue in Venezuela. In January 1989, a structural adjustment plan of the then neoliberal government of President Carlos Andrés Pérez (1974-1979; 1989-1993), which included fuel price increases, triggered one of the largest waves of protest in the country’s history.

During the events that went down in history as the “Caracazo”, security forces killed up to 3.000 people in the course of brutal repressive measures.