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Cheap Gas Fuels Fracas in Caracas
Published on Tuesday, May 2, 2006 by the Toronto Star / Canada
Cheap Gas Fuels Fracas in Caracas
Three-cents-a-litre has its downside
Low price has service centres fuming
by Tim Harper

CARACAS, Venezuela - Aldamar Roche, decked out in his best finely pressed Texaco togs, merely shook his head and looked down at the pavement as another in a parade of cars rode up to his pump in a Caracas suburb.

"We're just giving it away," he said.

Supporters of the Venezuelan President Hugo Chavez display and shout slogans in his support during May Day celebrations in downtown Caracas, Venezuela, Monday, May 1. (FERNANDO LLANO/AP PHOTO)
Just about.

At three cents a litre, Venezuelans have the cheapest gas prices in the world, a fraction of the 56 cents they would pay for a litre of bottled water or the 70 cents they would pay for a litre of milk.

While Prime Minister Stephen Harper and U.S. President George W. Bush face increased political pressure to do something about skyrocketing gas prices which have topped $3 (U.S.) per gallon in the United States and a dollar per litre in Canada, the problem here is different.

Half the gas stations in this country say they want to shut down because they can't make any profit selling gas that is about as expensive as the dust that blows onto Roche's service station.

President Hugo Chavez announced last Friday he is raising the minimum wage for workers, meaning gas station owners and franchisees must pay their workers more.

But he won't raise the price of gas for fear his poor backers from the barrios of this city will come down from the hills and bring the economy to a screeching halt as they have before.

The Venezuelan leader uses his oil riches as a political tool, sprinkling it around to curry favour in the region to further his goal of a Latin American "21st Century Revolution," but also threatening to cut off a very needy Bush, the man reviled by Chavez as the imperialist who is threatening to invade his country.

His tone depends on the day of the week.

At a worker's rally here recently, Chavez said he had no plans to cut off Venezuelan oil supplies to the United States.

"We have no plans to destabilize the lives of U.S. citizens," he said.

But Chavez has periodically warned Bush, the man he has taunted as a "drunkard" and a "donkey," that he will turn off the taps if Washington "goes too far" in its response to whatever issue the Venezuelan leader has created that day.

Twelve to 15 per cent per cent of U.S. oil imports come from Venezuela, the world's fifth largest exporter.

But it is a two-way street, leaving many to believe Chavez is issuing empty threats because so far he needs a U.S. market which accounts for something close to 50 per cent of his oil exports.

"It is the cheapest gas in the world," said Joao Rodriquez, as he filled his Porsche at the Texaco station.

"They tell me it is $3 in Miami. I feel very lucky. I would pay more. I need my car. But the people won't stand for it."

But Maria Louisa Alberto counsels a visitor to keep things in perspective that because Venezuelans have cheap petroleum doesn't mean other countries are not rich in other resources.

"They must understand the full context and the history of this country before they can draw conclusions," she said.

Gas station owners here have drawn their own conclusions.

"People are thinking of other businesses because we are just seeing too many losses here," said Roche.

Owners of 700 of the 1,500 gas stations in the country have told the oil ministry they want to get rid of their stations and move into something more profitable.

But that isn't easy, says a man who has owned a state-run station for 52 years.

While gas prices remain stable, employee, electricity and security costs at night continue to rise, says the owner, who spoke on condition of anonymity.

Yet, he says, you cannot just turn a gas station into another business overnight because of the infrastructure built into the location.

Oil prices shot back up above $73 per barrel yesterday although the heavier Venezuelan product fetches about $63 and North America consumers are beset by a confluence of international events.

Included among them is the ongoing war in Iraq, uncertainty over the standoff over Iran's nuclear ambitions, increased global demand, a rebel attack in Nigeria disrupting supplies there and, of course, the whims and threats of Chavez, who dispenses his oil to expand his political capital in the region and threatens to withhold exports to the hated Bush.

While his citizens sit and idle in daily traffic jams, money from his exports pour into Venezuelan coffers.

Last winter, he used the wholly-owned U.S. subsidiary of his state-owned oil company, CITGO, to dispense cut-rate heating oil to Americans in cold northeastern states, then flew them to Caracas where they expressed gratitude and fealty on his nationally-televised television show, Alo Presidente.

"We use our oil for the liberation of the people," Chavez shouted at a massive rally in Havana last weekend, where he brought his "Bolivarian Revolution" to the home of his strongest ally, Fidel Castro.

The third member of that leftist troika, Bolivian President Evo Morales, returned home yesterday to announce the nationalization of his country's natural gas and oil industry, ordering foreign energy companies to send their supplies to a state company for sales and industrialization.

Chavez has also increased exports to China and has signed a deal with Colombian President Alvaro Uribe which he hopes will be the first step in acquiring a pipeline to the Pacific Coast to ramp up Asian exports and reduce his dependence on the U.S. market.

Copyright Toronto Star Newspapers Limited


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