Peso Depreciation and Purchasing Power
In the past year, the value of the Cuban peso plummeted from 170 pesos to 270 pesos against the dollar on the black market, greatly benefiting those in possession of dollars who can afford commodities still priced in pesos, such as fuel. However, for Cubans who solely rely on pesos, refilling a typical gas tank costs more than half of the monthly minimum wage of 2,100 pesos.
The decline of the peso intensified after the Cuban government implemented a monetary reform in 2021, eliminating the complex dual-currency system. Consequently, a new black market exchange emerged, contributing to soaring prices throughout the island. This situation presents a paradox, as Cuba has long subsidized fuel and offset low wages for state sector workers through free healthcare, education, and reasonably priced utilities. However, these services have also suffered due to the economic crisis, which Cuba attributes to the enduring U.S. trade embargo dating back to the Cold War era.
Cuban Oil Needs and Global Perspective
Cuba relies heavily on imported crude oil, primarily from Mexico and Venezuela. Despite its discounted prices, Cuban gasoline is still more expensive compared to countries like Iran, Libya, and Venezuela, which possess significant oil reserves.
Yadira Carricarte, a Cuban residing in Italy who visited her family in Havana recently, was amazed by the low price of fuel when she refueled her compact rental car. “With three euros, I can fill up the tank,” she marveled. Analyst Bert Hoffmann, a Latin America expert at the German Institute of Global and Area Studies, emphasizes the necessity of aligning the peso with the dollar to address growing inequality. However, the current trend indicates the opposite is happening.