National gas prices surged last month due to the riots and violence in some of the worlds top petroleum-producing nations: Venezuela, Ukraine, and South Sudan.
Venezuela, which has the larges oil reserves in the entire world, is currently experiencing disastrous internal problems. Its citizens have taken to the streets to protest the socialist Chavez-Maduro regime, which has left the country financially in dire straightslack of consumer staples like flour and toilet paper, runaway inflation, power outages, and the highest murder rate in the world.
Despite the slew of problems that Venezuelans currently face, they can still fill up their gas tanks for less than they would pay for a cup of coffee. At about 6 cents a gallon, gas in Venezuela is the cheapest in the world. Venezuelans rely on the dirt-cheap gas prices so much that they tend to take this subsidy for granted, yet giving away gas for next to nothing is severely hurting the countrys economy.
According to The New York Times, estimates show that the Venezuelan government gives away $30 billion in gasoline and diesel every year, which is one of the main reasons why the inflation rate in Venezuela has skyrocketed.
Not only does Venezuela dole out (almost) free gas to its citizens, but it also provides deeply subsidized oils to Cuba, Jamaica, Haiti, and Nicaragua. The Petróleos de Venezuela S.A. (PDVSA) also shows love to the United States, donating $400 million worth of heating oil to poor households in America.
This controversial program, which began under Hugo Chavezs rule to spite his nemesis, President George W. Bush, was temporarily delayed this year for undisclosed reasons. The approval for the donation finally came through CITGO on February 10, after months of record-breaking cold winter weather.
There is no doubt that Venezuela is a major player in the worlds oil market, but what does the current instability in Venezuela (along with the troubles in South Sudan and Ukraine) mean for Americans at the gas pump?
Trilby Lundberg, an industry analyst who reports to the Associated Press, expects the prices to continue rising at the pump, despite the fact that U.S. imports of Venezuelan oil are at their lowest since 1985. According to AAA, the prices this spring will continue to rise, with the national average price of gas falling between $3.55-$3.75 per gallon.
Although Americans are currently paying less at the pump than they were one year ago, this small conciliatory fact doesnt make it any easier for those who still have to shell out $70 to fill up their tanks.