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The Politics of Petrol
Subsidizing traffic: A street in Caracas, Venezuela.  Photo by nicholaslaughlin from Flickr.

Subsidizing traffic: A street in Caracas, Venezuela. Photo by nicholaslaughlin from Flickr.

Under the leadership of Hugo Chavez, Venezuela has become a country flirting with socialism, what Chavez, in one of his rhetorical flourishes, calls the 20th century heir of the Bolivarian Revolution. Yet paradoxically the Venezuelan government under Chavez has been managing its petrol, the strongest pillar of the Venezuelan economy, in a way that’s a far cry from socialism. Because of a long and complex history, something that Chavez has been unable to undue, the Venezuelan government provides enormous gasoline subsidies, so much so that Venezuelans only pay 7 cents a gallon at the pump. At first glance this would seem like a generous handout to the poor who could use a little help filling up the tank. But once you see that more than 50% of commuters use public transit, many of them from the lower classes, you realize that the gasoline subsidies are actually targeting a wealthy minority of car owner. It’s a clear case of welfare for the rich, which according to some estimates exceeds $9 billion a year. Why does Chavez tolerate it? It’s the politics of petrol; cheap gas is essential for preventing social unrest. “If you raise gasoline, the people revolt,” Janeth Lara told the New York Times. And by people she was not referring to Chavez’s socialist supporters, but those like herself who own gas guzzling SUVs.

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