Morales explains end to fuel subsidies

SANTA CRUZ, Bolivia, Dec. 31 (UPI) -- Bolivian President Evo Morales said rampant smuggling was the reason he chose to end fuel subsidies -- causing gasoline prices to rise sharply in his country.

Morales said Bolivian subsidies that artificially lowered the price of fuel caused an increase in the smuggling of gasoline to nearby Peru and Brazil, CNN reported Friday.

Bolivia, he said, spent $380 million on fuel subsidies in 2010 to lower costs on a total of $660 million spent on fuel imports. In the meantime, $150 million worth of fuel was smuggled out of the country this year, he said.

"For a small country, like Bolivia, that's a lot of change," he said.

"Our policies are always to favor the poor people," he said, although he acknowledged the spike in fuel costs since the subsidy ended.

"Evidently, there are some people in transportation who take advantage of this situation and increase their fares by 100 percent," Morales said.

Morales said angry protests in the cities of El Alto and Santa Cruz would "stabilize" and he questioned the use of the word "massive" to describe the protests.

"The information I have is some 5,000 Bolivians," he said.

Business leader Daniel Sanchez Solis disputed Morales' claim that the protests were organized by the business community. "He's badly informed," Solis said.

Subsidies had kept prices for gas at about $1.88 per gallon, but prices jumped 73 percent this week, CNN reported.

Crude oil prices have also risen over the past two months, hovering on the New York Mercantile Exchange at around $90 per barrel. The move in Bolivia is unlikely to have an impact on the world stage, however.