Consequences of fuel price increase in Cuba

As announced through various government channels and by officials in late December, the price of fuel in Cuba will increase in a few days, including wholesale, retail and foreign exchange costs for tourists. As expected, this would result in “ordinary Cubans”.

In the Round Table television programme, the Minister of Energy and Mines, Vicente La O Levy, talked about the problems the country is facing in the supply and distribution of fuel.

He said the increase in fuel prices responded to a number of reasons, including savings, but also the need to adjust the exchange rate and avoid subsidizing the tourism sector and foreign visitors.

According to the minister, Cuba needs $1.8 billion per year to import diesel to meet its demand. “In 2023 we were able to bring only 609,000 tonnes of diesel, which is equivalent to about $600 million (one third) and it is felt that. “The same thing happened with gasoline.”

Price rise measures and their consequences in Cuba

Regarding the measures adopted to increase the price of gasoline, he said that they have several objectives.

,First of all, we should take into account that the tourist sector and foreign tourists coming to the country exchange their currency at 120×1, but the price of gasoline is at 24×1. This means that we are subsidizing tourism abroad, to the person who pays for gasoline at 1.30 USD in the world and here pays for it at 30 Cuban pesos.

,How to apply the remedy? Well, creating a network of service centers selling in foreign currency. But if at the same time we have another network of service centers that sell in national currency for 30 pesos, then no one is going to buy in foreign currency. Prices should be equal to today’s official exchange rate in the country, 120 x 1, not 24 x1. Therefore, prices in the national currency are going to increase.

The Minister of Energy and Mines said that “With this increase in prices, what we want is to fulfill the second objective, which is to regularize the trade.”

The real consequences for “ordinary” Cuba? What is really worrying for Cubans is that these increases will also increase the cost of other services such as private transportation, which is currently the basis of transportation on the island. Apart from this, the government has already warned of increasing cost of public transport. Something that hasn’t been reported yet.

This increase in fuel prices in Cuba will take place from February 1. But the effect of increase in prices of private transport and some food items in the name of transportation can be seen from this week.