Venezuela's government sets a 6,000% increase in gas prices

Venezuela, the country with the world's cheapest fuel, has ramped up gasoline prices by 6,000% - the first hike in 20 years.

President Nicolás Maduro has unveiled a series of new economic measures that include increasing the price of gasoline from $0.01 to $0.60 the litre. Although this signifies a 6,000% hike, Venezuela, where the oil and fuel industries are in the hands of the state, will still have the cheapest fuel in the world.

The economic package aimed at boosting the country´s flagging economy integrates other key measures such as the devaluation of the Bolivar by 58.7% and a 20% increase of basic salaries, reported AFP.

The 95 Octane gas will experience the biggest increase, from 0.097 Bolivars a litre to 6 Bolivars a litre, while 91 Octane gas will now cost 1 Bolivar instead of the previous rate of 0.070 Bolivars. According to Maduro, this is a necessary measure to make the production of fuel sustainable and ensure the functioning of the state-owned oil company PDVSA.

Venezuela has the biggest known oil reserves in the world. Since Hugo Chavez was elected President in 1998 fuel subsidies have increased dramatically, to the point where the state was almost giving it out for free.

This ‘socialist’ police was sustainable due to the country´s oil exports, which represented 95% of all export revenues. Since the collapse of crude oil prices, which have dropped to $34 a barrel from $100 two years ago, the Venezuelan government has found it hard to maintain such policies.

“The time has come to establish a system that guarantees access to hydrocarbons at a fair price but that also guarantees the funding of investment in producing that gasoline,” said Maduro in a televised address.

Gas stations across Venezuela will implement the new fuel prices from today. According to AFP, long queues of motorists waiting to fill their tanks could be seen at many gas stations since the announcement.