Venezuelans fume as government signals end to 'free' petrol
In the Socialist state that is home to the world’s largest oil and gas reserves, petrol is cheaper than water. But not for much longer.
At a state-run petrol station in central Caracas, drivers hand over six Bolivars – 60p at the official rate, about 5p at the black market rate – for a tank of subsidised petrol.
Adding the bills to his oil-stained bundle, Juan Torres, the attendant, laments that this long familiar scene will soon change.
“I’d heard that the government was going to raise petrol costs, but they’ll have to be extremely careful,” he says. “Venezuelans won’t accept unfair prices.”
As global oil prices slump, President Nicolas Maduro has horrified Venezuelans by becoming the first politician in a decade to broach a rise in petrol prices. It is a risky – potentially even politically fatal – move. The last attempt to raise prices prompted the “Caracazo”, the 1989 riots and subsequent massacre by security forces that left several hundred people dead and which remains a vivid scar on the Venezuelan political memory.
“You’ll see strikes and riots. The country will come to a standstill,” said Maryelis Rodriguez, who had stopped to refill her car at the government PDVSA station in the Caracas district of La Castellana.
Handing over less than the price of a potato for 60 litres of petrol, she said Venezuelans felt they had a right to cheap fuel. “We see so much corruption in government that we will defend the only remaining luxury that we enjoy as a nation,” she said. “Petrol price rises will never be accepted by the Venezuelan people.”
Inflation is so rampant – 52.6 per cent last year – that many shops have long stopped printing price tags. Most Venezuelans face a constant struggle to make ends meet. But the petrol pump has been the one place where they do not have to scrimp.
While a lack of imports and strict currency controls make basic goods ever scarcer and more expensive, petrol remains plentiful and cheap. Prices have been frozen for the past 15 years at about 0.07 Bolivars per litre. A litre of bottled water costs about 1.5 Bolivars. A kilo of onions costs 120 Bolivars.
The abundance of fuel has shaped a nation where energy is not saved but spent with abandon: gas guzzling SUVs clog city roads, waiting taxi drivers leave their engines running for hours and unoccupied hobs flame away in kitchens. At the border with Colombia, a thriving trade in petrol smuggling has sprung up, as drivers fill up their tanks with subsidised fuel in Venezuela and siphon it out to be sold at a profit in its more expensive neighbour.
“Petrol is gifted to us in Venezuela because we are the source”, says Hellen Gonzalez, an imports salesman from Caracas for whom a week’s supply of packed lunches costs 100 times what it does to fill the tank of her four-wheel-drive vehicle. “We suffer under massive inflation for everything else we need to buy; at the very least we can benefit from our country’s own natural resources.”
Making up 25 per cent of GDP and 96 per cent of exports, oil has long been the engine of the Venezuela’s economy. In the 1970s it paid for the building boom that transformed Caracas into a jungle of now-decaying modernist skycrapers. Today it is paying for the Socialist revolution begun by Mr Maduro’s predecessor, Hugo Chavez, who diverted oil profits into social programmes for the poor and into the populist subsidies that help tp shore up political support.
But amid falling international oil prices and the severe economic woes in other sectors, that Socialist project is now stuttering. And in recent years, production problems at the state oil giant PDVSA have seen the country importing tens of thousands of barrels of refined petrol from the United States, as its refineries fail to cover domestic demand.
Meanwhile, an increasing proportion of exports are being used to pay back loans from overseas lenders such as China, forcing Venezuela to cut its more lucrative oil sales to the United States, now at a 28-year low.
If the government is to prevent the revolution from stalling completely, the annual bill for petrol subsidies of $30 billion (£18 billion) may no longer be sustainable. Keen to play down the country’s economic difficulties, Mr Maduro insists that the government does not need the extra income, but says “it seems reasonable that production costs should be covered”.
In December, Rafael Ramírez, the chairman of PDVSA and vice-president for economic affairs, said that a break-even cost of petrol would be between 2.4 and 2.7 Bolivars per litre, at least 34 times the current price.
“We have to have a national discussion about whether or not the moment has arrived to charge for petrol,” he said. “In this country you don’t pay for petrol, because PDVSA pays for you to fill up with petrol.
“With a 7-Bolivar bottle of mineral water you can buy 72 litres of petrol, with what you pay for a newspaper you can buy 100 litres of fuel and for a can of soft drink you can get 250 litres of diesel. This doesn’t make sense at all.”
In an attempt to reassure the public that petrol prices will not surge overnight, government officials have stated that the increase will be “gradual”.
“The aim will be to cover the costs of bringing the oil from the ground to the pump. We understand that every Venezuelan has the right to benefit from our country’s resources,” Eduardo Piñate, a Socialist congressman, told The Daily Telegraph. “As of yet we cannot say when or by how much the prices will be raised, but free petrol in Venezuela cannot remain a reality much longer.”