World and Nation

Venezuelans Oppose Subsidy Cuts For Fuel Despite Economic Woes

In a country moving toward socialism, the beneficiaries of government largess here are still people like Nicolas Taurisano, a businessman who dabbles in real estate and machinery imports. He is the proud owner of a Hummer.

Motorists in the United States smarting from rising gasoline prices, take note: Taurisano pays the equivalent of $1.50 to fill his Hummer’s tank. Thanks to a decades-old subsidy that has proven devilishly complex to undo, gasoline in Venezuela costs about seven cents a gallon compared with an average $2.86 a gallon in the United States.

“It is one clear benefit to living in an otherwise challenging country,” said Taurisano, 34, who also owns a BMW, a Mercedes-Benz, a Ferrari and a Porsche.

Many Venezuelans consider the subsidy a birthright even though it bypasses the poor, who rely on relatively expensive and often dangerous public transportation. Economists estimate that it costs the government of President Hugo Chavez more than nine billion dollars a year.

Critics of Chavez, and the president himself, agree that the subsidy is a threat to his project to transform Venezuela into a socialist society, draining huge amounts of money from the national oil company’s sales each year that could be used for his social welfare programs.

Gasoline prices have often been a taboo subject for Venezuelan governments. There are memories of the riots in 1989, in which hundreds, perhaps thousands, of people died after protests set off by an increase in gasoline prices that resulted in higher transportation costs. That instability helped set in motion a failed coup attempt by Chavez in 1992, which first thrust him into the public eye.

After his re-election to a six-year term last December, he was re-elected in Dec. 2006, per clips when his political capital was abundant, Chavez called the gasoline prices “disgusting” and said his government was planning to raise them with a measure “financed by those who own a BMW or a tremendous four-wheel drive.” But he turned his attention to other matters, avoiding the touchy subject.

The link between social peace and gasoline so cheap it is almost given away is evident to many motorists. “If you raise gasoline, the people revolt,” said Janeth Lara, 40, an administrator at the Caracas Stock Exchange, as she waited for an attendant to fill the tank of her Jeep Grand Cherokee at a gas station here on a recent day. “It is the only cheap thing.”

During an oil boom that is lifting the incomes of both rich and poor, Venezuela is grappling with Latin America’s highest inflation rate, about 16 percent. In a rare move in a world growing used to a weak dollar, The local currency, the bolÌvar, has plunged almost 50 percent in unregulated trading this year, reaching a record low of about 6,000 to the dollar in October (the official rate is fixed at 2,150 to the dollar.)

Gasoline is one of the few products subject to price controls here that is in relatively ample supply. Newspapers recently have been filled with tales of consumers struggling to find milk. Last month, eggs were scarce.