Cubans brace for impact as gasoline prices set to soar

Cubans brace for impact as gasoline prices set to soar

HAVANA, Jan 9 (Reuters) – Shortly after Cuban taxi driver Javier Ernesto heard fuel prices were set to soar fivefold on Feb. 1, he bolted for his local gas station.“We’re trying to fuel up before they raise prices,” the 33-year-old Havana resident told Reuters as he waited in a line of vehicles several blocks long. “It’s a considerable hike and I think it’s going to be hard for us afterward.”

Cubans across the capital crowded gas stations and braced for impact ahead of the biggest single jump in fuel prices on the island in decades, a measure the communist-run government says is necessary to control deficit spending and raise funds for imports of food, medicine and critically – more fuel.

The price increase for the popular 94-octane gasoline will bring a single 40-liter tank of fuel to 6,240 pesos, or about $23 at the black market exchange rate, well over the average monthly state salary of 4,209 pesos, or $15.60.

There will be similar rises for other grades of gasoline and diesel, the government said on Monday.

“It’s not the same to fill your tank with 1,000 pesos as it is to spend 6,000,” said state worker Ernesto Cordero. “The price of everything is going to go up; this will cause a chain reaction.”

The announcements, though rumored for months, rocked Cuba, where residents who depend on vast state subsidies to survive, have seen inflation spike and costs of most goods and services skyrocket.

The government, which said it will also raise prices of liquified gas, used for cooking, and electricity for top-tier users, said it will protect the vulnerable from rising prices.

In a separate announcement on Monday, the government said it would open 29 service centers that will charge for fuel exclusively in dollars, a twist that 28-year-old doctor Pedro Ducasse, of Havana, worried might lead to privileged access to gasoline for those with access to foreign currency.

Health workers, he told Reuters, earn wages in pesos and would not enjoy that luxury.

“I’m not against the rise in prices but the issue is that there should be fuel available for everyone,” he said.

Cuba’s government has said charging in dollars is necessary to raise funds to import fuel from abroad and said it hopes the new measures will help stabilize supply in the long term.