Venezuela has the world's largest estimated oil reserves. Yet its world-low retail gasoline prices — about 6 cents per gallon — wouldn't exist without government subsidies. Now, President Nicolas Maduro is calling for a formerly unthinkable price hike. In effect, he's admitting that his supposed socialist paradise is unsustainable.
Venezuela suffers from shortages of basic goods, 56-percent inflation, poor roads, schools and hospitals and rampant crime, reports The New York Times. Yet it annually gives away gasoline and other fuels worth $30 billion, its state oil company is having to borrow millions of dollars from its central bank and it is even resorting to paying market prices for imported U.S. gasoline because of problems with its own refineries.
Mr. Maduro's being coy about when and how much he'll raise gasoline prices. That's likely because the last increase, 15 years ago, sparked riots in which hundreds of Venezuelans died. But financial imperatives force him to take political risk, which he'll probably try to lessen by earmarking the resulting revenue for housing, education or other social programs.
Maduro's dilemma is a symptom of the economic disease he has perpetuated as successor to the late Hugo Chavez. And so long as socialist policy heavy on government meddling afflicts Venezuela, yet more state intervention necessitated by prior state intervention — such as these gas price hikes — will afflict its economy.
Socialism got Maduro elected but he's finding out that it's no way to run an economy.