The government of Venezuela, believed to be the most oil-rich nation in South America, is considering raising gas prices to keep the national economy afloat, though such a move could spark protests and unrest in a nation already rife with political tension.
Officials are believed to be considering it in light of current oil prices being close to free. Bloomberg reports that it is currently possible to find gasoline in Venezuela for $0.002 a gallon.
As Bloomberg notes, the fall in gas prices has much to do with oil prices plummeting internationally, in part due to an increase in oil production by the United States. While prices have dropped recently, Venezuela has not raised prices since 1989. At the time, the raise in price did trigger protests and, given the volatile circumstances of President Nicolás Maduro’s regime currently, many fear that history could repeat itself.
Crude oil in Venezuela is at $38 a barrel, reports Reuters—down from $99 in June. The prices have prompted President Maduro to assert that he does not believe oil will return to a price of $100 a barrel, though he did not specify how indefinite that prediction may be. “We have less foreign currency, but God will provide,” he said in Venezuela’s equivalent of the State of the Union address last week. Venezuela currently also boasts the world’s highest inflation rate.
Resistance to the rise in prices is already visible in interviews with Venezuelans. One man, a taxi driver speaking to Bloomberg, argued that raising gas prices would not prevent the Venezuelan government from mismanaging any new income. “What will they do with all that extra income?” he asked. “The government continues to say they are investing in social missions but has the quality of life for most Venezuelans improved? The answer is no.”
Economists within Venezuela are pushing for Maduro to respond to the crisis by, among other things, raising oil prices. 48 economists signed a letter to Maduro last year demanding that prices be raised and government officials cut their spending. They also requested the currency exchange system be loosened to allow the market to prosper more freely. None of these ideas have been executed.
Instead, Venezuela turned to a list of allies in the hopes that they would receive some aid. Maduro has recently returned from a world tour in which he sought support to stabilize his economy from Saudi Arabia, Russia, China, Portugal, Iran, and others.