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

About the only ones complaining are gas station owners, who are prohibited from raising prices to meet rising labor and other costs.

"It's an uphill fight," says Norbis Pena, head of the gasoline dealers association. "We are operating in a deficit."

Periodically, the state oil company gives the gas stations a larger slice of the retail price, increasing the government's losses.

Along Venezuela's borders the subsidy also fuels a huge smuggling industry, which multiplies government losses and finances Colombia's outlawed right-wing paramilitaries, who tax the trade. In border areas of Colombia, where gas retails for 20 times the Venezuelan price, hawkers line highways offering jugs of cheap Venezuelan gas. Venezuelan authorities have tried to staunch losses by rationing deliveries to gas stations and requiring drivers to show proof of Venezuelan residence in order to fill up.

The subsidy also contradicts the principles of the Kyoto Protocol, which Venezuela signed last year. A 2002 study commissioned by the National Assembly found that Venezuela's per-capita carbon dioxide emissions were more than double the average for Latin America. Yet, Venezuela's energy voraciousness hasn't prevented Chavez from frequently denouncing the US for endangering the planet through reckless burning of gas. In a recent speech at the UN, Chavez blamed global warming for spawning storms with "demolishing impacts" like hurricane Katrina's.

Venezuelan environmentalists shake their heads.

"If Chavez would only act according to what he says, then we'd have an environmentalist Venezuela," says Manuel Diaz, president of the Venezuelan Environmental Foundation.

Ironically, the gasoline subsidy also contradicts Chavez's philosophy of spending the nation's great petroleum wealth on the poor. The same National Assembly study found that the richest 20 percent of Venezuelans received 6.5 times as much of the gasoline subsidy as did the poorest 20 percent, who rarely own cars. Meanwhile, many public hospitals lack basics like gauze and X-ray machines, parks aren't maintained, and the public bus system is crying for funds.

The government subsidizes some other products, particularly food, though not nearly as deeply as gasoline. Pollster Leon predicts Chavez will stick with the gasoline subsidy because it "gives the message that he's concerned about everybody," even though it mainly benefits the upper class.

During recent months, Chavez has extended the concept beyond Venezuela's borders, winning allies by offering below-market petroleum to South American and Caribbean nations. He has even offered cheap gasoline to poor US neighborhoods.

US Sen. Connie Mack, a Florida Republican often critical of Chavez, said in a telephone interview that the largess will last only until oil prices fall again.

"Eventually, it will all come crashing down around" Chavez, Mr. Mack predicted. [Editor's note: The original version incorrectly referred to Rep. Connie Mack as 'Ms.']

But Mark Weisbrot, an analyst with the left-leaning Center for Economic Policy Research in Washington, said he expects oil prices to stay high or even rise, enabling Venezuela to keep financing the gas and other subsidies.

"It's a big waste and it's environmentally destructive," he said of the gas subsidy. "But it's not an economic problem."

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