Archive for May 26th, 2008

An article about those adorable Venezuelans

May 26, 2008

Businessweek has an article
about us adorable Venezuelans and our cheap gas.

The article contradicts itself by first saying it is not easy to increase the price of gas, but then tells us how a very unpopular President, Rafael Caldera, did it in 1996. The article relates it to ending the monopoly on gas distribution, but the price increases actually came later.

The article also says that it was public criticism that stopped Chavez from increasing the price of gas. As far as I know, Chavez mentioned it once and never brought up again, maybe because of a poll said it was not popular.

At US$ 11 billion of subsidy every year, offer every Venezuelan Bs. one million per year to compensate the price increase and if Chavez can’t sell that to the “people” he is not the snake charmer we all think he is.

The gasoline subsidy is a very regressive one, its impact being stronger the better to do you are. On top of that, it has wrecked havoc with traffic and the number one subsidy of official dollars last year did not go for food, but you guessed it, it went to give foreign currency to the auto industry.

Of course, no politician will ever make this a campaign issue, they are as adorable as all of us, gas-subsidy-loving Venezuelans.

(Don’t miss the slide show at the end of the article, Iran follows us at 40 cents a gallon and most Gulf States at twice that, but remember, the 12 cents is calculated at the official rate of exchange!)