Venezuelan cheap petrol policy backfires

In any other country, one would assume that the pump attendant had made a mistake.

“That’ll be 2.83 bolívars (66 cents),” said Martin Andrade after filling up the 40 litre tank of a small Toyota jeep.

But this petrol station is in Venezuela’s sweltering northwestern Zulia state, where petrol is the cheapest in the world.

The perverse effects of Venezuela’s cheap petrol policy can be seen everywhere in the country. Gas-guzzling Dodge Darts and Ford Mavericks from the 1970s ply the roads. Caracas, the capital, suffers from nightmarish traffic jams. Worst of all, the policy has made smuggling petrol a multibillion-dollar business given that a gallon costs just $0.085, a seventh of the price in Saudi Arabia and a 48th of the price in neighbouring Colombia.

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