• Submitted by: manso
• Business and Economy
• 09 / 28 / 2010

---

HAVANA — Cuba has upped already-high gasoline prices by about 10 percent amid sweeping changes to the economy, a move that could lead to grumbling among cash-strapped islanders, particularly private taxi drivers who are not allowed to raise their own prices.

The changes, which took effect Monday, were announced in the Communist Party-newspaper Granma, which cited rising international prices for the move. It was the first time prices have risen since September 2008, when crude oil internationally sold for about a third more than it does now.

The cost of diesel fuel — used by many of the old cars that populate Cuba's streets — rose to $1.19 a liter ($4.50 a gallon), about 11 cents a liter (42 cents a gallon) higher than previously. The highest octane fuel rose even more to $1.73 a liter ($6.54 a gallon), from $1.51 a liter ($5.72 a gallon).

The prices approach those paid in Europe and are apparently the highest in the hemisphere, topping pump prices in Brazil and Bermuda. They are a fortune for Cubans who make the average salary of just $20 a month.

But the changes are not likely to affect many islanders, a reason why past gas hikes here have not led to unrest, as they sometimes do in other developing countries.

Few people on the island own a car, and those lucky enough to have been issued a vehicle through their state-run companies usually have a monthly quota of gas paid through work.

The government heavily subsidizes the public transportation system on which most Cubans rely, and it did not announce an increase in those prices.

Those who will take a hit are the thousands of private taxi drivers who use gas-guzzling American clunkers from the 1950s or rusting cars from former Eastern Bloc countries to ferry people along set routes to and from work.

In most cases, the price they charge is set at 10 pesos (about 50 cents). Even before the price hikes, many complained that high fuel costs meant it didn't pay to cruise the city looking for a fare.

Taxi drivers interviewed Monday said it would be even harder for them to make ends meet if the government does not authorize higher fares, particularly since they already pay a steep price for permission to drive.

The gas price hikes come as the government is seeking to transform its socialist economy into a system that includes more private workers and more reliance on prices to regulate supply and demand. Earlier this month, Cuba announced it was laying off half a million workers — about one-tenth of the work force — while allowing far more free enterprise.

On Friday, the government approved some 178 private business activities, gave Cubans the right to employ people not related to them, and even promised credit to entrepreneurs.

Among the new activities authorized by the government is the sale of fruits and vegetables from roadside kiosks or homes, something many had already done on the black market. On Monday, the government gave more details of how the legal stands will work, saying a pilot program allowing the stands in a few provinces will be expanded nationwide.

Those interested must register and pay taxes starting at 25 percent on any profits, according to an article in Granma.

"The idea is to give order to what had been a raging river," the article said,referring to the widespread illegal vegetable stands that have existed until now.

By PAUL HAVEN (AP)

Source: http://groups.yahoo.com/group/CubaNews/message/118096