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Life in the land where filling up an SUV costs $3

Venezuelans love paying 10 cents per gallon, but critics warn of economic, environmental impact.

By Mike CeaserCorrespondent of The Christian Science Monitor / September 28, 2005



CARACAS, VENEZUELA

Auto salesman Leonardo Caicedo looked over the shiny Jeep, Chrysler, and Dodge vehicles crowding the showroom in central Caracas, where a gallon of gasoline now costs about the same as a large hen's egg, and a liter costs less than a single photocopy.

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The SUV sales are "excellent," he said, and customers don't worry about fuel efficiency, since they can fill their 18-gallon tanks for less than $3.

"It's good for us, and it's good for the people so they can buy luxury cars with big engines," Mr. Caicedo said.

But critics say Venezuela's highly subsidized gasoline, which retails for between 10 and 15 cents per gallon, and 7 cents for a gallon of diesel, is bad for the country.

Besides feeding perpetual traffic jams and worsening air pollution, they say the subsidy is a multibillion-dollar drain on the national budget, sapping money that could help schools, hospitals, or public transit, and transferring it to the wealthier classes, who own the cars. And they wonder how long leftist President Hugo Chavez can defy economic gravity.

But few public policies here are as popular as is almost-free gasoline. Wealthy Venezuelans, who generally despise Mr. Chavez, say that if the government stopped subsidizing gas it would only waste the money on corruption. The poor fear a bus-fare hike.

Caracas pollster Luis Vicente Leon said Venezuelans consider almost-free gasoline a birthright.

"Venezuelans believe that they live in an oil field," he said. "They feel they own the oil, and therefore should not pay for it."

Politicians remember 1989, when gasoline and food price hikes helped trigger huge riots. The violence demonstrated the popular discontent that would later make Chavez a hero for leading an unsuccessful 1992 coup attempt.

"Here, when gas goes up, presidents fall," said cab driver Francisco Zambrano.

Former President Rafael Caldera, who preceded Chavez, indexed gasoline prices to inflation, and Venezuelans grudgingly accepted the price rises. However, upon taking office in 1999, Chavez froze gasoline's retail price in the local bolivar currency. Since then, the bolivar has plummeted in relation to the dollar, while double-digit inflation has multiplied the prices of everything else.

The super-cheap gasoline has eliminated any incentive to conserve. During recent months, many street merchants have bought portable generators to power their hamburger stands and loudspeakers, adding more pollution to Caracas's already-gray air.

"Here, gasoline is cheaper than water," Felix Mancilla, who sells pirated CDs and DVDs, says happily. He uses his generator to run a television and speakers, which customers use to test his products. Running the generator all day long costs him only $2 per week.

"It's a way to halt inflation," he says.

The subsidy, and lack of any pollution or safety controls, also keeps many decades-old rolling wrecks on the streets. Police here do not even cite vehicles for driving at night without headlights, much less for violating pollution laws.

"My car wouldn't be permitted in Spain," Mr. Zambrano said of the battered blue 1974 Chevy Malibu with broken headlights and twisted fenders that he uses as a taxi. A customer appeared, and, after three scraping attempts, he got the car started and clanked up the street.

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