Economists warn that Venezuela is now in a tough spot. Raising desperately needed cash by lowering subsidies would almost certainly fuel inflation, which at 29.5 percent in Caracas is already Latin America's highest.
Economists predict the government will be forced to raise prices, slowly.
That makes 36-year-old taxi driver Victor Bolivar wary.
"If gasoline goes up," he said, "food goes up, everything goes up. But the one thing that doesn't go up? Peoples' salaries."
NVDL: One of the main ways governments earn money is by taxing petroleum sales. As these prices increase, governments earn less. We're heading towards that now.
CARACAS, Venezuela – Venezuela has the planet's cheapest gasoline: At 12 cents a gallon (3 cents a liter), it costs about 30 times less than bottled water.
But falling oil income and sagging crude output could soon mean a pinch at the pump in oil producing countries like Venezuela, where hefty government subsidies have for decades guaranteed cheap fuel. Iran is already cutting back, while Venezuelan President Hugo Chavez has revived talk of a price hike for the first time in 12 years — a politically unpopular move that two decades ago sparked deadly riots in Caracas.
Iran, with the world's fourth-largest oil reserves, reduced its most heavily subsidized monthly ration by 20 percent to 26 gallons (100 liters) per car in March. Malaysia, where subsidies ensured some of Southeast Asia's cheapest gasoline, increased prices by 40 percent to $3.31 a gallon (61 cents a liter) last year, sparking nationwide protests. Net fuel importers Indonesia, Taiwan and India also reduced subsidies.
|
No comments:
Post a Comment