For two decades, Venezuelans have paid just pennies at the pump.
But on Wednesday, President Nicolás Maduro announced that they’ll soon be paying a lot more.
Before the announcement, a liter of high-quality gas in Venezuela cost about 10 centavos or one U.S. penny. Now it costs 6 bolivars or about 60 U.S. cents — a 6000% price increase.
“That’s an aggressive hike in fuel prices and it’s still the cheapest in the world,” says Edward Glossop, an economist at Capital Economics who covers Venezuela.
Maduro on Wednesday also announced a new structure for the nation’s already convoluted exchange rates.
One bolivar went from being worth 6 U.S. cents to about 10 U.S. cents on the official exchange rate.
Some Venezuelans, however, have to use a second government exchange rate called the SIMADI. That rate will now be allowed to float. On Thursday, one bolivar — on the SIMADI rate — was worth half a U.S. penny ($0.005.) So a liter of high-quality gas using this rate costs about 3 U.S. cents.
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SOURCE: CNN, Jackie Wattles and Patrick Gillespie