Gasoline in the United States has fallen to about $2 a gallon and continues to slide. However, that price is nowhere near the least expensive in the world. Venezuela has the least expensive gas in the world at two cents per gallon.
The Venezuela figure could change. Gas stations across the country have closed due to falling supply and new rules by the government as it attempts to lockdown delivery of all goods and services as coronavirus spreads across the country. Emergency and essential vehicles still have access to gas. However, a huge black market keeps the gas supply in the market high.
Even with these restrictions, Venezuela could continue to have the least expensive gas in the world. The country has the largest oil reserves of any nation at 300 billion barrels. Much less of that is refined than in most recent years. It only produces 760,000 barrels a day. Its production has been injured by an aging infrastructure and by chaos and corruption in both the government and business.
Another reason gas prices likely will remain low is that the government still subsidizes them. It is a means to lower costs for its citizens as the economy is in a deep depression and has been for two years. Money is nearly useless because of the devaluation of the local currency, the bolívar. That distorts the value of all goods and services and makes them widely expensive. Gas is among the few things on which the government can hold at low prices.
Because people can afford gas, it has become a sort of currency in the country. The population regularly trades gas for food, which becomes more expensive by the month. Many Venezuelans find cash useless due to the constant devaluing.
While U.S. gas prices are driven by the price of oil, refinery capacity and transportation costs, they are a relatively good indicator of the overall economy. The same is true in most nations in Europe, including the United Kingdom, and in Japan. However, oil-rich nations other than Venezeula subsidize gas prices. The price per gallon is $0.10 in Iran, $0.34 in Kuwait, $0.45 in Qatar, $0.55 in Saudi Arabia and $0.56 in the United Arab Emirates.
Two-cent gas likely will be the norm in Venezuela for the foreseeable future. However, the nation’s economy is in such terrible shape and hyperinflation is so damaging that the low price does very little for the finances of Venezuela’s drivers.
24/7 Wall St.
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