Venezuela implements most significant gasoline price hike since 1989

By Alexandra Ulmer

CARACAS, Feb 19 (Reuters) -- Venezuela's 1989 fuel price hike helped spark riots that left hundreds dead, traumatized the country and spooked future presidents from touching the world's cheapest fuel.

Yet the most significant rise since then hit pumps on Friday across the crisis-hit OPEC producer with barely a murmur.

That was because the price hike, which translated to 1,329% for 91-octane-rated gasoline and 6,086% for 95-octane, still left fuel as one of the cheapest buys in the country. Besides, many of the country's 29 million people have bigger worries on their minds these days.

Venezuela's 91-octane gasoline now costs 1 bolivar/liter and 95-octane gasoline 6 bolivars -- the latter being 60 US cents at the strongest official rate, but just $0.006 on the black market.

"A liter of water is still more expensive than a liter of fuel!" said Raul Ramirez, a taxi driver, as he filled up his beat-up blue cab. "They should have increased it a bit more. This price is still a loss for the government."

Small lines formed at some stations before Friday, but they were a far cry from the now ubiquitous food lines that can stretch for blocks.

The increase could fan the flames of already raging inflation by triggering higher transport and food prices. It also comes at a time when Venezuelans are already struggling to overcome worsening shortages of everything from toilet paper to painkillers.

"I agree with the increase, but it is not the right time for the country," said Andres, 30, an architect waiting to refuel his motorbike.

Late socialist president Hugo Chavez admitted domestic fuel prices needed to rise, but held them steady throughout a decade-long oil boom.

With prices static since a small bump nearly 20 years ago, many Venezuelans deem cheap fuel as a birthright, though the subsidy was costing the government some $12.5 billion/year.

Friday's increase will ease the balance sheets at state oil company Petroleos de Venezuela (PDVSA) as it struggles with low oil prices, which Maduro has said are near production costs as major debt obligations loom.

"With this much I used to pay for fuel all year and still have change!" joked accounting student Michael Padilla, 27, as he handed the pump attendant a wad of low-denomination bills to fill his Jeep.

But with inflation now raising some prices weekly, the effect of the measure will soon be diluted. The new prices also will not dissuade rampant smuggling of fuel into Colombia.

"It's not enough to resolve this crisis," Padilla added, grimacing.