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Hugo Chávez challenges Venezuelan 'birthright' to cheap gas

In Venezuela, Humberto Patadilla pays just under $1 for 21 gallons of gasoline. If Hugo Chávez raises gas prices, he says, it could 'cause an explosion against him.'

By Jasmina KelemenContributor / March 4, 2011

A worker counts change at a filling station in Caracas. Consumers can pay about 5 cents a gallon, thanks to longstanding state subsidies that carry an increasing cost to the national economy.

Howard Yanes/AP/File

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Caracas, Venezuela

Venezuelans have endured blackouts, water rationing, and skyrocketing inflation. But ask them to pay more than $1 to fill up their gas tanks and you could be inciting revolution.

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"Absurd!" says Humberto Patadilla, a 60-year-old mechanic, at the thought of paying more. To many in Venezuela, which has the largest petroleum reserves in the Western Hemisphere, cheap gasoline is a birthright.

"There's more than enough gasoline. [President Hugo Chávez] is giving it away to the rest of the world, why raise the price here?" Mr. Patadilla says as he pays just under $1 to top off an old, beat-up Mercedes with 21 gallons of gasoline.

Vehement in his disdain toward the president, Patadilla finds one potential benefit to higher gasoline prices: It could unify this ideologically polarized nation "and cause an explosion against him."

And for that very reason, analysts say, President Chávez won't cut the gas subsidy for now, despite its costing the government at least $1.5 billion annually at a time of increasing financial strains. Potential for populist backlash is too great to risk before a 2012 presidential election, reflecting the balancing act leaders face worldwide between rising gas prices and voter discontent.

While Chávez now appears focused on efforts to mediate a peace deal for Libya's ongoing civil conflict, he took on the oil subsidy recently when he lectured Venezuelans that cheap gas can't last.

"Every time you fill up your gasoline tank, you're filling it up with the cheapest in the world; and the government is subsidizing over 90 percent of what it really costs," Chávez said in a television address. "We must begin to reduce gasoline consumption."

Gas subsidy encourages waste

Successive governments have unsuccessfully grappled over how to raise prices, sometimes to disastrous effect. An unexpected gasoline price increase in 1989 set off a week of deadly rioting. Nor is the problem isolated to Venezuela. Last December, Bolivia's Evo Morales reversed a decree raising gasoline prices after his leftist base went on a rampage. The same month, Iran deployed riot police to gas stations when Mahmoud Ahmadinejad slashed the gas subsidy, nearly quadrupling prices.

After local media seized on Chávez's remarks, officials quickly quashed the idea of price hikes, blaming the opposition for spreading misinformation.

"Where did the opposition get [the idea] that we're going to ration gasoline or raise the price?" Oil Minister Rafael Ramirez later said during an address to the National Assembly. The government is requesting a more "rational use" of energy resources, not rationing, said Mr. Ramirez.

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