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.
“One day, prices will need to be adjusted,” Chavez warned recently in a televised speech. “We’re practically giving away gasoline.”
To spread wealth and buy support, many oil producing nations subsidize fuel for domestic consumption. Gasoline sells for as little as 39 cents a gallon (10 cents a liter) in Iran, 60 cents a gallon (16 cents a liter) in Saudi Arabia, and $1.52 a gallon (40 cents a liter) in Iraq, where prices were ratcheted up following the U.S. invasion.
The global economy has crashed, however, and so has the price of oil. The same countries that used billions from crude exports to subsidize gasoline at home, even as prices hit record highs elsewhere in the world, are now under tremendous strain.
