Monday, April 22, 2013

Free gas in Caracas

Gas in Venezuela costs less than six cents per gallon.  This has helped maintain political support for the ruling party, but as a recent WSJ piece points out, has been ruinous for the economy.  Every gallon of gas sold is a missed opportunity for government revenue; Venezuela's budget deficit represents 12% of GDP.  Consuming gasoline at home rather than exporting it means that the country has shortages of goods such as milk and flour.  Another example of the extortions resulting from price controls. 

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