For two decades, Venezuelans have paid just pennies at the pump.
But on Wednesday, President Nicolás Maduro announced that they’ll soon be paying in dimes. Fuel will cost 1 boliviar per liter (about 10 US cents) for the cheapest grade, while high octane gas is going up to 6 bolivars per liter, or about a 12-fold increase.
For the past 20 years, Venezuela’s roughly 30 million residents have been able to buy gas for the equivalent of about four U.S. cents per gallon, thanks to hefty subsidies.
“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.
It wasn’t immediately clear when the price increase would go into effect.
Maduro also announced a new exchange rate structure for the nation.
According to the official rate, one bolivar is now worth ten American cents, making gasoline nearly 3 times more expensive than before.
But most Venezuelans do not use the official rate for their dollar purchases.
Some use the SIMADI rate, which will now become a “floating rate,” Maduro said. It’s currently set at 202 bolivares and 80 centavos per one USD.
However most Venezuelans rely on an unofficial “black market” rate for their daily dollar purchases.
The black market rate was valued at 1,045 bolivares and 90 centavos per one USD on Wednesday night.
(Both the SIMADI and the black market rates are as calculated by dolartoday.com, a site that many Venezuelans use to track the country’s volatile forex rates.)
Venezuela is one of the largest oil producers in the world. It’s a member of OPEC, and oil exports account for about 95% of its export revenue. Maduro said in a Spanish TV and radio broadcast that Venezuela has enjoyed the cheapest gas prices on Earth.