Tuesday, January 27, 2009
The Cost of the World's Cheapest Gasoline
By Humberto Marquez
The world's cheapest gasoline is available in Venezuela due to the subsidy program that benefits car owners while keeping investing money from the oil industry. Since 1998, gasoline has cost between three and four cents per liter. A bottle of water costs 25 times that amount. The subsidy is estimated to be $12.5 billion based on the difference between domestic and export prices. Essentially, over $3000 a year in gasoline is being given away to every consumer leaving oil company's without money they could use to help with fuel distribution. Only the middle and upper class can afford private vehicles, which consumer 80 percent of the fuel, leaving the lower class, which makes up 80 percent of the population with 20 percent of the fuel for public transportation. Smuggling of gasoline has become an issue as well since the prices in the countries surrounding Venezuela are significantly higher. The cheap prices have contributed to more cars on the road, and a subsequent increase of traffic jams and decrease of road maintenance.