12 Cents A Gallon?
By Justin Gardner | Related entries in Economy, Money, The WorldLooks like we need to invade Venezuela!
CARACAS, Venezuela (Reuters) - Taxi driver Jaime Tinoco works the streets of Caracas in a 1976 Chevy Nova that guzzles 19 gallons (72 liters) of gas a day. But he doesn’t worry about fuel efficiency — filling his tank costs just$2.30.
While U.S. consumers struggle with soaring energy prices, Venezuela’s gas is now the world’s cheapest at 12 cents a gallon and Washington’s regional foe, President Hugo Chavez, vows to maintain subsidies that keep fuel dirt-cheap.
“Those gringos have everything — so why does their gas cost so much?” asked Tinoco between chuckles as he navigated a midday traffic jam. “Don’t they have oil reserves?”
Oh…just you wait Jamie. Someday the prices will start to go up because they must. And then we’ll see who’s laughing last. HAHAHAHA!!!
Oh wait. You’re paying 12 cents a gallon? Umm…nevermind.
Listen, if Chavez was really smart, he’d push alternative energy initiatives immediately so gas can stay at this level. Because if the price can stay this low, then Venezuela has a chance to build a vibrant economy. After all, America was built on the back of cheap transportation, i.e. cheap gas.
One last ironic note to this story. It looks as if this gas subsidy is ultimately benefitting who? Ah yes…the people with more money.
Venezuela’s gas subsidy is the subject of endless grumbling by economists who say it promotes consumer waste and costs the state billions of dollars in lost revenue.Critics say the subsidy largely benefits middle and upper-class vehicle owners at the expense of government income that could be spent on the poor.
“They call it the ‘Hood Robin’ subsidy,” said Jose Luis Cordeiro, a petroleum engineer who writes about energy issues. “Instead of stealing from the rich to give to the poor, it’s the opposite.”
He estimates Venezuela would have taken in at least an additional $8 billion last year — almost 8 percent of the nation’s GDP — if Venezuelans had paid market rates for fuel.
Even more evidence that alternative energy sources would do Venezuela well. But will they listen? Doubt it.
This entry was posted on Wednesday, May 10th, 2006 and is filed under Economy, Money, The World. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
May 10th, 2006 at 10:38 pm
After all, America was built on the back of cheap transportation, i.e. cheap gas.
Could you please clarify the starting point at which you believe America started being “built”? And to which parts being built you refer?
May 10th, 2006 at 10:39 pm
(Keep in mind that I’m absolutely not a low-gas-price at any price person; in fact, if you look back in your own blog, you’ll see that it’s quite the opposite.)
May 11th, 2006 at 12:39 am
From when FDR made a deal in the Middle East to the present time. We built these machines, and we eventually realized we needed willing sources to fuel our economy. And we have up until this point. But now we’re finally seeing the beginning of a fallout from that policy.
May 11th, 2006 at 12:42 am
> Even more evidence that alternative energy sources would do Venezuela well. But will they listen? Doubt it.
Oh yeah, b/c every other country in the world did such a good job researching alternative fuels when our gas prices were low.
Venezuela researching alternative fuels when petro is 12 cents on the gallon makes about as much sense as the builders of the Titanic researching alternatives to travel by ship.
The question is, what are you willing to do about the petroleum problem?
May 11th, 2006 at 12:45 am
My point is that it’s in the world’s consciousness right now, regardless of whether or not gas is cheap. It doesn’t mean that Chavez is going to ignorant of the current realities of other countries. Personally, I think it he could push these programs now, it would help Venezuela realize a very vibrant economy.
May 11th, 2006 at 1:50 am
Listen, if Chavez was really smart, he’d push alternative energy initiatives immediately so gas can stay at this level.
You mean like Peaceful Nuclear Energy?? See Iran Freedom and Support Act of 2005 (Senate Bill 333)
May 11th, 2006 at 5:35 am
We could have 12 cent gas too, if our government subsidized it by $3+/gallon. It would be incredibly stupid policy, but we could do it.
May 11th, 2006 at 5:45 am
“Venezuela researching alternative fuels when petro is 12 cents on the gallon makes about as much sense as the builders of the Titanic researching alternatives to travel by ship.”
Gas is not really 12 cents a gallon in Venezuela. The consumer just pays that much at the pump. They also pay a ton in opportunity cost. Had they sold the oil, they could have gotten around $1.66 for it (70 bucks a barrel at 42 gallons per barrel). Plus, someone had to pay to refine and distribute it. Whether it comes out of taxes or a offset in other government services, that has to come from somewhere. So the cost to the people of Venezuela is close to the cost to the American people - they just don’t see it.
May 16th, 2006 at 10:41 pm
[...] Twelve cents a gallon? That's what gasoline costs in Venezuela. [...]
May 18th, 2006 at 6:32 pm
Americans ignorance is amazing.
Why in the hell would venezuelans look for a substitute to using gas in cars when (1) Venezuela doesn’t build cars (2) Gas is extremely cheap.
Why doesn’t the US look for a substitute to computers?
Maybe because they are cheap as hell.
It’s all about supply and demand.
Chavez doesn’t sell the gas cheap, gas has ALWAYS been extremely cheap in Venezuela, so it wasn’t his decision.
If Venezuela wanted to “find a substitute for gas” there wouldn’t be a need for that since Venezuela sits on one of the largest reserves of natural gas in the World, almost as much as the US, except that it’s been sitting there for years because Venezuela hasn’t have a need to touch it.
http://www.cia.gov/cia/publications/factbook/rankorder/2179rank.html
The whole problem goes down to “American think they own the World”
The policies that Venezuela use depend on what’s going on in Venezuela not the US.