There has been a lot of fuss about gasoline in Cuba lately. There are stories going around that gasoline in Cuba is the most expensive in the world, at EUR 6 per liter.
In this blog we are going to tell you what exactly is going on and what is true of all the rumors circulating on the internet.
TL;DR - Gasoline costs USD 1.30 for tourists and can only be paid by credit card at selected gas stations
What exactly is going on?
Do you have a minute? It's quite a complex story.
Let's take a step back in time to before 2021. The Cuban economy then had 2 currencies. The CUC (for tourists) and the CUP (for locals).
The two currencies were linked to each other and were both used and accepted everywhere. 1 CUC was 25 CUP.
Fast forward to 2021, the CUC has been abolished, and Cuba remains with 1 currency, the CUP, for everyone, locals and tourists.
The price of gasoline at the time of the CUC was 1.20 CUC per liter, which amounted to 30 CUP. This price remained after the abolition of the CUC, one liter of petrol was 30 CUP, which equated to approximately EUR 1.10. A great price for a liter of liquid gold.
But then inflation came, the CUP became less and less valuable, because there was more and more demand for foreign currency. On the street, 100 CUP was now paid for every euro (while the bank still used an exchange rate of approximately 25 CUP for every euro).
So you can see what happened. Tourists came to Cuba with foreign money (e.g. euros), exchanged it on the street at a very nice rate and then went to the gas stations with their acquired CUP to fill up with gasoline.
Just an example of how that worked;
One euro at the bank was 25 CUP. 1 liter of gasoline 30 CUP. So each liter cost the equivalent of EUR 1.20 at the pump.
However, one euro on the street was 100 CUP. 1 liter of gasoline 30 CUP. So each liter cost the equivalent of EUR 0.30 at the pump.
This was the case quite early on after the abolition of the CUC, but soon the exchange rate on the street rose to 200-300 CUP for each EUR. If you could have exchanged money for 200 CUP, petrol would cost EUR 0.15 per liter, and with an exchange rate of EUR 300 it even became EUR 0.10 per liter.
Gasoline was therefore extremely cheap for tourists (and locals who owned EUR, among other things).
Due to the high inflation, the government has also adjusted their own exchange rate. At the bank you now get 125 CUP for every EUR.
And then?
This cheap price had some consequences; There was a huge shortage because there was so much demand for gasoline due to the low price and the government earned virtually nothing from it because it was sold so cheaply. Because this situation was unsustainable for the government, they made a number of adjustments.
- There are special gas stations for tourists throughout the country where payment can only be made with a credit card. At these stations the price is fixed at USD 1.30 per liter. The price has therefore been normalized to the rate before 2021.
- The price for the premises at the other petrol stations has been increased to 150 CUP per liter.
In this way, the government wants to ensure that there is enough gasoline available for tourists to travel around the island with their own rental car and increase their income from sales in order to be able to purchase more gasoline on the international market.
So what is true about the reporting?
There is absolutely no truth in the reports that petrol in Cuba now costs EUR 6 per liter.
But how do the media arrive at 6 EUR per liter? That's quite easy to explain. If you search the internet for the exchange rate of 1 EUR to CUP, you will find that 1 EUR is ~26 CUP. (This is not correct, because it is 125 CUP), the new petrol price is 150 CUP. If you divide that 150 CUP / 26 CUP, you arrive at approximately 6 euros. Conclusion: they are using the wrong exchange rate.
Gasoline in Cuba is therefore not 6 EUR but costs 1.30 USD per liter for tourists and is only available at a number of stations throughout the country and payment can only be made by credit card.
Are you going to Cuba with a rental car and would you like to know more about gasoline and prices, or would you like to receive a list of the stations? Send us a message via the contact form and we will be happy to help you!