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Venezuela’s crisis and plunging oil production impact countries in the Caribbean as well, as most people in the poorest nation in the Western hemisphere, Haiti, now have electricity just three hours a day, after Venezuela stopped sending cheap oil to the country.
Under Petrocaribe—a program to gain influence in the Caribbean and Central America—Venezuela was shipping very cheap oil to countries in the region in exchange for their support. The collapse of Venezuela’s economy and oil production, however, put an end to the very favorable pricing of oil products to the previous beneficiaries of the Petrocaribe program, including Haiti.
Without the cheap oil from Venezuela, Haiti’s economy and everyday activities are in disarray because in most areas, people have electricity only for three hours a day, AP’s Ralph Thomassaint Joseph reports.
Gas stations are empty, hospitals have to run on backup generators, and people find it difficult to go to work or send their kids to school, as the fuel crisis has been worsening without cheap Venezuelan oil, while the government struggles to finance fuel purchases on the open market.
Haiti has seen its fuel supply increasingly challenged since the collapse of the Petrocaribe program.
Haiti had received almost 70 percent of its fuel from Venezuela at the peak of the Petrocaribe program, under which Venezuela offered very attractive financing to Caribbean nations to buy its refined oil products.
However, after the Petrocaribe program collapsed last year, Haiti was forced to turn to international markets for its fuel supply. But without the Petrocaribe financing for oil, the Caribbean nation has been struggling to find enough U.S. dollars to pay for the product deliveries, and suppliers aren’t having it.
Physical oil supply and trading company Novum Energy Trading Corp suspended earlier this year fuel cargoes bound for Haiti because of overdue payments.
This has exacerbated the fuel and energy crisis in the Caribbean country, which now risks recession amid double-digit annual inflation, while a gallon of gasoline sells for as much as $12 on the black market.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.