GLOBAL ECONOMY

Gas prices jump more than sixtyfold in Venezuela, president devaluates currency

  • A motorcyclist fuels up at a gas station in Caracas, Venezuela, Wednesday, Feb. 17, 2016.

    A motorcyclist fuels up at a gas station in Caracas, Venezuela, Wednesday, Feb. 17, 2016.  (ap)

  • A driver sits in his car as he fuels up at a gas station in Caracas, Venezuela, Wednesday, Feb. 17, 2016.

    A driver sits in his car as he fuels up at a gas station in Caracas, Venezuela, Wednesday, Feb. 17, 2016.

In an attempt to shield Venezuela's economy from further collapse and fend off mounting calls for his ouster, President Nicolas Maduro addressed the nation Wednesday night to announce a monumental gasoline price hike.

In this South American country, where gasoline has long been so heavily subsidized that it is virtually free, gasoline prices are a touchy issue in Venezuela — memories are still vivid from 1989 riots in Caracas that erupted after the proposal of a series of austerity measures including a hike in gas prices.

Maduro said gas prices will jump more than sixtyfold, yet drivers will still be able to fill their tanks for pennies.

He said the increased gasoline revenue will finance the government's social programs.

"We must charge for gas," he said. "I ask that the people welcome and support this new system."

The price of premium gasoline will rise from 0.1 bolivar a liter to 6 bolivars per liter, and regular gasoline will jump from 0.07 bolivar to 1 bolivar per liter. In contrast, a beer costs around 300 bolivars while a basket of strawberries goes for 800 bolivars. Calculated at the widely used black market currency exchange rate, the price per gallon will be a few U.S. cents.

Maduro also announced that the strongest of the country's official exchange rates, used for essential goods like food and medicine, would be changing from 6.30 bolivars to the U.S. dollar to 10 bolivars to the dollar. Meanwhile, the bolivar is worth about 1,000 to the dollar on the black market.

The economic measures come as Maduro fights for his political survival.

Oil accounts 95 percent of Venezuela's export earnings, and plummeting world prices have helped push its state-led economy into a deep recession, with chronic shortages, empty store shelves and soaring inflation.

Opposition leaders took control of Congress in January for the first time in more than a decade and have been on a collision course with the socialist president ever since.

Lawmakers are weighing several options for removing Maduro from office, including shortening his term, and calling a constitutional referendum. But many fear the Supreme Court, which has not ruled against the executive branch since the late President Hugo Chavez took office in 1999, would simply overturn these efforts.

Opposition leaders quickly dismissed Wednesday's measures as insufficient to right the flagging economy.

Earlier in the day, the opposition's top vote-getter, two-time opposition presidential candidate Henrique Capriles, called for a presidential recall referendum.

Maduro's approval ratings have languished in the 20 percent range for most of his term, but a recall battle would be complicated. To force a recall referendum, the opposition would need to gather nearly 4 million signatures. And if a referendum was held, the president would be removed only if the number of anti-Maduro votes exceeded the number of votes he got in the 2013 election.

A voter referendum might be a longer and more risky path than some of the other recall options, but Capriles said it was one the government would be forced to recognize.

"Now is the time," he said. "They will not be able to overturn a referendum."

Based on reporting by the Associated Press.

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