The cost of gasoline for consumers is about to increase by 6,000% in Venezuela.
While that price increase might sound dramatic, the average cost for a high-quality gasoline before the price hike was about 10 centavos or one U.S. penny per gallon.
Following the price increase, citizens will now pay approximately 6 bolivars or 60 US cents per gallon.
One bolivar went from being worth 6 US cents this week to about 10 US cents on the official exchange rate.
Some Venezuelans use a second government exchange rate called the SIMADI. That rate will be allowed to float. On Thursday, one bolivar on the SIMADI rate was worth half a US penny ($0.005.) That would make one liter of high-quality gas using that rate still only cost about 3 US cents.
Then it gets more complicated as most Venezuelans exchange their bolivars for dollars on a black market. One dollar on the black market equals 1,045 bolivars, according to dolartoday.com. A year ago, one dollar equaled 190 bolivars on the black market.
“The time has come for us to create a system that guarantees access to gasoline at fair Venezuelan prices but that also guarantees payment for what is being invested to produce the gasoline and the functioning of Petroleos de Venezuela,” Maduro said, referring to the state-run oil producer.
Venezuela has the largest oil reserves in the world. Oil accounts for nearly 95% of the country’s exports.
The country is in a massive recession because of the global oil supply glut which has drastically reduced oil prices over the last 18 months.