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Acumen

We take a look at the numbers and tell you where they add up and, even more importantly, where they don’t.

Men exchanging Venezuelan currency with gas pumping into car in the background
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Petrol Paradise

Source: Getty

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Pedals to the Metal

Why you should care

Our gas prices could be a lot lower, but the trade-offs are probably not worth it, as some of the world’s biggest oil producers are learning the hard way.

Are you one of those people who groans every time you see the dollar figure that flashes on the gas station screen after you’ve finished filling up your car? Or drives miles out of your way to get to the cut-price station where gas is 20 cents cheaper a gallon? Well it’s quite a commute, but there is a place where you can get gas ultra, mega cheap! In fact, it’s just:

7 cents a gallon

You just have to travel all the way to Venezuela to get it.

Venezuelan drivers, it turns out, enjoy the world’s cheapest gasoline, the beneficiaries of one of the planet’s largest oil reserves and massive government subsidies that artificially tamp down the prices of that liquid gold they use to fuel their cars. Just think, if you were in Caracas right now, you could fill up an average 17- or 18-gallon gas tank for less than the price of a Starbucks latte.

And Venezuela’s not the only OPEC country with some seriously sweet deals at the pump. According to the latest World Bank data from 2012 (which is in liters, not gallons), Libyans pay an average of just about 44 cents a gallon, the second cheapest gas in the world. Saudi Arabia comes in third at 59 cents.

Man's hand pointing to a gas station pump

Source: Getty

A petrol station worker points at the petrol price in Caracas on December 13, 2013.

Raising rates per gallon to even half of what, say, Americans pay, would be tremendously unpopular and politically dangerous.

Of course these and other oil-rich countries — Egypt springs most immediately to mind — are also grappling with the market-distorting effects of keeping fuel prices so low. The New York Times reported last month that Venezuela’s state-run gas monopoly is ”giving away $30 billion worth of gasoline, diesel and other fuels each year … forcing it to print money” and run huge deficits. The World Bank also shows that Venezuelans’ carbon dioxide emissions per capita are more than one metric ton higher than the average for Latin America’s developing countries — but if it costs just a couple more Venezuelan bolivars to drive and visit tu hermana 100 miles away, hey, why not?

Now the president, Nicolás Maduro, is mulling a gas price hike to help staunch Venezuela’s financial bleeding. But raising rates per gallon to even half of what, say, Americans pay, would be tremendously unpopular and politically dangerous. It’s the same sort of conundrum that Egypt — which ranks 12th on the World Bank’s list with $1.67-per-gallon gas — faces as it tries to right its economy. The International Monetary Fund has demanded Cairo reform its energy subsidy program, among others, in exchange for a $4 billion-plus loan. Though it desperately needs the cash, none of Egypt’s post-revolution governments have been willing to take the political hit they know would come with any rate spikes. Egypt’s current finance minister, however, told USA Today last week that the officials are now planning to gradually wean the country off energy subsidies over the next five to seven years.

Americans can also take heart knowing the pain at the pump could be much worse. The United States rates 30th in the world in terms of average gas prices — at roughly $3.60 per gallon. That probably sounds mighty good right now to someone in one of the most expensive countries for gas, like Turkey or Norway, where it costs upwards of $9.25 per gallon to fill ’er up. How do you say “ouch” in Norwegian?

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Meet The Author Emily Cadei

Emily covers government, world affairs, business and sports for OZY. California-bred and D.C. based, she's reported from four of the world's seven continents -- still waiting for a byline from South America, Australia and Antarctica!

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