The government of Cuba has announced a 500% increase in fuel prices beginning on February 1, as the nation suffers its worst economic crisis since the 1990s, with Cubans now readying themselves to weather what is being called a humanitarian crisis.
The Cuban government can no longer manage a massive subsidy campaign that puts subsidized prices on nearly all essential goods and services.
“The country can not maintain the price of fuel, which is the cheapest in the world,” media cited Economy Minister Alejandro Gil as saying on Monday.
Officials confirmed on Monday that the cost of one liter of regular gasoline would increase from the current 20 cents to $1.10, while special gasoline would increase from around 25 cents to $1.30.
Additionally, there will also be a 25% increase in electricity prices along with a hike in natural gas prices. Prices for water, public transit and gas canisters will be increased.
Cuba’s GDP contracted by between 1% and 2% last year, and the country is having difficulty importing basic goods with a fiscal deficit around 19% and official inflation pegged at 30%.
With price spikes set to go into effect in two-and-a-half weeks, Reuters reports that Cubans are lining up at gas stations for extra fuel at lower subsidized prices.
The fuel hike increases will bring the cost of filling a 40-liter tank with gasoline to the equivalent of around $23, compared to an average monthly state salary of less than $16. Reuters also reported that the government would open 29 fuel stations that accept payment only in dollars, creating the potential for “privileged access to gasoline”.
For Cubans, 2023 was characterized by major power blackouts and long lines to purchase fuel, with February 1 expected to add another jolt to struggling consumers.
By Charles Kennedy for Oilprice.com
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