From Nearly Free to Out-of-Reach: Gasoline’s Crazy Price Swing in Venezuela

CARACAS, Venezuela — A dollar could once theoretically buy about 5 billion gallons of gasoline in Venezuela — more than enough to supply the state of Michigan for a year. Now, a dollar gets you half a pint, if you’re lucky.

The unfathomable swing in fuel costs paid by Venezuelans mirrors the irrational distortions in the country’s mismanaged and isolated economy, which have turned Venezuela from Latin America’s richest nation to its poorest in little more than a decade.

Venezuela sits on the world’s biggest oil reserves but has registered the biggest drop in oil production seen anywhere in at least four decades. The country has some of Latin America’s biggest oil refineries, but they have become so run down over the years that nowadays none produce gasoline, said Ivan Freites, an oil union leader.

Venezuela’s shambolic oil industry has been further weakened by American sanctions, which have severely constricted all remaining gasoline imports.

So now Venezuelans are contending with unprecedented fuel shortages, which have forced people to walk miles to work, left crops rotting in the fields and turned the country’s fuel from the world’s cheapest to most expensive.

“If you give gasoline away for free, eventually you’re going to end up running into trouble,” said Francisco Monaldi, a Venezuelan oil expert at Rice University in Houston.

Venezuelan gasoline officially remains by far the cheapest in the world, still priced by the government after years of hyperinflation at a rate equivalent to 0.00000002 cents per gallon. The state-owned gasoline stations still sell limited quantities of fuel at this price, but motorists must queue days in advance for even a chance to buy it.

In practice, drivers who cannot or will not sit in lines for days are forced to pay up to $80 for a five-gallon can of fuel on the black market run by the Venezuelan military. Worse, the black-market supplies are sporadic and limited in Caracas, the capital, forcing even ministers’ bodyguards to post appeals for gasoline on social media.

The streets of Caracas are lined with hundreds of waiting cars snaked around the few periodically functioning gas stations. Some motorists sleep in their vehicles or pass the night huddled by their motorbikes on the highway to get a better chance when armed soldiers begin organizing chaotic lines at sunrise.

In Venezuela’s depressed countryside the supply is still worse, causing frequent outbreaks of protests and road blockades, and often leaving even ambulances and fire trucks without fuel. Some towns have been practically cut off, forcing residents to rely on pack animals and occasional passing cars to get to the nearest city.

Just a 10-minute drive outside Caracas, in the village of Turgua, residents have been forced to subsist on food from their small plots, after gasoline shortages left them without means to get to their jobs in the capital and food trucks stopped replenishing local shops.

“We’re isolated now,” said Gustavo Cisneros, a teacher in the village.

The crippling shortages have punctuated a stunning coda to the Venezuelan government’s once-grand ambitions to become a global gasoline superpower.

A decade ago, the country’s then President Hugo Chávez showered low-income American families with subsidized fuel to win political favors and poured hundreds of millions of dollars into massive new refinery projects across Venezuela and Latin America. None were ever completed. Some were not even started.

In the western region of Zulia, the already chronic fuel shortages became so deep in recent months that smugglers who used to traffic cheap gasoline to nearby Colombia have reversed course to bring Colombian gasoline into Venezuela.

Although many Venezuelans have long become accustomed to gasoline shortages, the drying up of supplies has come as a shock to the relatively well-supplied residents of Caracas, who for generations viewed free gasoline as a birthright befitting the country’s historical oil legacy.

An attempt by a previous government to raise gasoline prices in 1989 left hundreds of dead in riots, making the current, highly unpopular president, Nicolás Maduro reluctant to reduce subsidies.

Free gasoline has also become an important part of Mr. Maduro’s political system, allowing him to reward the military and favored business executives with multibillion fuel import and distribution businesses to keep their loyalty in the economic crisis.

The armed forces now control all fuel distribution in Venezuela, allowing the military to siphon to the black market a virtually free product at an astronomical markup. And officers continue to oversee the lucrative gasoline trafficking to Venezuela’s illegal gold mines, according to residents.

To ease the shortages, Mr. Maduro has turned to allied local businessmen to evade the American sanctions and procure gasoline from abroad using barter schemes and navigation tricks that make shipping surveillance difficult, according to oil traders.

Mr. Maduro also has turned to ally Iran, which has recently sent gasoline tankers to Venezuela and flew in technicians to help repair the country’s crippled refineries.

He has even gone so far as to consider privatizing Venezuela’s gas stations and no longer subsidize prices, according to a reform draft seen by The New York Times. Such a change would reverse one of the flagship policies of Mr. Chávez, who was Mr. Maduro’s predecessor and mentor.

These measures, however, will at best provide only respites to Caracas and other major cities amid the country’s deepening economic crisis and tightening international isolation, said Asdrubal Oliveros, director of Ecoanalitica, a Caracas-based consultancy.

“There won’t be normal fuel supply in Venezuela until we see a new government,” he said.

Isayen Herrera contributed reporting.

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