America goes from fuel dependence to a high tax burden due to subsidies

International conflicts, high oil prices, and increased domestic demand led to higher gasoline prices in the country America, where dependence on this fuel is still very high, and it enjoys support in a large part of the countries of the continent, which generates Complex tax burden.

(See: dependence on fuel and the high tax burden that America bears).

Uruguay, Chile and Nicaragua record the highest prices per liter of gasoline, while Venezuela, Bolivia, Ecuador and Argentina record the lowest prices.

Fuel subsidies are a common policy on the continent, which initially sought to reduce the impact of prices on consumers and key sectors of the economy such as transport companies.

These policies represent a major financial burden and a social problem, because the moment the government tries to reduce or remove subsidies, it may face a social outbreak, as happened in Bolivia, Chile, Cuba, and Panama. Or to other problems such as fuel smuggling in Venezuela and Argentina.

Venezuela, which has the largest oil reserves in the world, about 300.878 million barrels, has the lowest price for gasoline in America, a situation that favors smuggling on the borders with Colombia and Brazil.

(See: The situation of the new strain of Covid-19 in America: They ask that we not let our guard down.)

However, more than three years ago, Venezuelans were enjoying almost complete subsidies for five years which became “unsustainable”, so Nicolás Maduro’s government was forced to increase the price of this fuel to 0.5 dollars in some service stations, while in others they set a price supported by the bolivar equivalent to 2 cents on the dollar. With a purchase limit of 120 liters per month.

“In Venezuela, a bottle of water costs much more than filling a gas tank.” So there was a “yes or yes” of a price increase, said Graciela Urdaneta, chief economist at Ecoanalitica, to EFE, who noted that this subsidy led to annual losses of $1 million for the country, which began importing due to a decline in oil production and refining.

Fuel prices in Bolivia has been stable for 19 years, and Luis Arce's government has already said it will not lift subsidies, c.Many experts also mentioned the large burden on the state, which this year amounts to about $1.4 billion. The price of a liter of gasoline in the Andean country is about $0.54.

To the Director of the private Bolivian Institute of Foreign Trade (IBCE), Gary Rodriguez, “Sustainability of support in the future” This depends on the availability of “imports of 80% of fuel consumed” and the decline in natural gas production in the country, which for many years has been a support for the Bolivian economy.

In Ecuador,Fuel subsidies reached $3.2 billion in 2023. The current government of Daniel Noboa is looking for a plan to save between $450 and $550 million by splitting gasoline subsidies.

Since June 2022, the price of 85 octane gasoline, the most widely consumed, has been frozen at $2.40 per gallon (3.78 liters). While the price of diesel was set at $1.75 per gallon.

In Argentina, “super” (cheaper) gasoline sells for 87 cents per liter at service stations of YPF, the state-controlled oil company, in Buenos Aires. Since last December, the government of Javier Miley has implemented several measures that have raised the price to a level that is in line with global markets and makes it more profitable for companies in this sector.

The price of gasoline has accumulated a 139.2% rise since December, in a context of very high inflation and loss of purchasing power, and Argentines reduced their loads at gas stations in an overall decline of nearly 10% in January, according to sector sources. It was consulted by EFE.

In Colombia price The price of gasoline saw a gradual increase from 2022 to December 2023, a period in which a gallon (3.785 litres) rose from about $2.10. (at the exchange rate that year) to about $3.92 (at today's exchange rate).

(See: The situation of the new strain of Covid-19 in America: They ask that we not let our guard down.)

This measure comes to reduce the financial deficit, specifically the deficit of the Fuel Price Stabilization Fund, which relies on the Ministry of Finance, and is a mechanism through which the final consumer is supported to protect the internal market from sudden changes in international markets. Crude oil price.

In Mexico, the price is controlled so that it is not higher than inflation, with mechanisms such as reducing the collection of the special excise on production and services (IEPS) per liter of gasoline, which has allowed fuel prices to fluctuate largely. Support it at the expense of reducing its tax revenues.

The average price of gasoline is $1.3 per liter; $1.4 for premium and $1.4 for diesel.

The demand for fuel in the region is increasing, and some countries have been forced to purchase the shortage from abroad, as is the case Brazil, Chile, Paraguay and Bolivia, which for years has been one of the main suppliers of gas.

The value of gasoline in Brazil is about $1.11. In 2023, “Although Petrobras announced that its prices would no longer be linked to import parity, the value of gasoline maintained its link to international market prices.” Sergio Araujo, president of the Brazilian Association of Fuel Importers (ABICOM), told EFE.

He added: “By 2024, we believe that gasoline prices will follow global market prices, and that approximately 10% of annual demand will have to be imported.” he added.

In Chile, where almost all fuel sold is imported, the price of gasoline is not much different, except in 2021., when the value of 93-octane gasoline broke the barrier of 1,000 Chilean pesos (about one dollar at today's current exchange rate) per liter for the first time. The cost is currently $1.21.

Paraguay imports 100% of its hydrocarbon needs, and because it is not a producing country, it has developed an agrofuels industry.

The chief economist of the Central Bank of Paraguay, Miguel Mora, explained to EFE that the decline in fuel prices in Argentina This prompted Paraguayans to fill their tanks on Argentine territory, which helped the government reduce fuel imports in 2023.

(See: The World Health Organization says that dengue fever in America may increase in the second trimester.)

In Cuba, gasoline and diesel prices – fixed and fixed – This increase has remained the same since the government announced at the end of last January that it would be postponed until further notice by more than 400% after discovering a computer virus that affected the cybersecurity of gas stations.

Once this measure is implemented, a Cuban will have to pay $44 to fill a 40-litre tank, while the average salary is barely more than $35, at the official exchange rate and $14.5 on the widespread informal market.

Nicaragua has the highest price for gasoline. This value has been frozen since April 2022 at $1.30 per litre.

Costa Rica, a country that does not produce oil, records historic prices in 2022 exceeding $1.5 for the first time. Last year, the value remained at $1.2.

In Panama, since July 2022, the price has been frozen at $3.25 per gallon for 91-octane gasoline and diesel. The value of a gallon of special, regular gasoline and diesel in El Salvador ranges between 3 and 4 dollars.

In Uruguay, the price of Premium 97 and Super 95 gasoline, respectively, has remained at $2 and $1.97 per liter since December.

Unlike the rest of the continent, demand for consumer goods in… The United States and Canada have declined in recent years due to factors such as increased production Cars that consume less fuel and increased use of electric cars.

(See: “The conquest of America was agreed upon between the indigenous people and the Spanish.”)

Evie