Know anything about Ecuador right now? There are full blown riots across the country as they recently axed their gas subsidies. Indeed, Ecuador had some of the cheapest gas in the entire continent, at under $2 a gallon. Right now, it’s around $3 in the US and $4 in Peru.
It was so cheap in fact, that I remember when I crossed the border by land guys on the Ecuadorian side held big red gas cans to sell cheap fuel to new arrivals. Literally on the bridge into the country random strangers were hawking gallons of subsidized gas.
Letting the price drop suddenly does no harm, but little good for politicians. As soon as the price goes back up, people complain. Better to let those drops occur very subtly and briefly, using the ISC to keep the price flat.
But a rapid spike? That’s doom. Gas is the basis for the entire transportation system and disproportionately impacts poorer people when it rises.
This is at the heart of the protests in Ecuador, and even more recently in Chile. Chile raised Metro line prices only to face looting and rioting across Santiago. It’s also what triggered protests in Lima over toll road rate hikes.
The point is, if you want peace in your town, don’t mess with the cost of getting around. Peru gets this. For as long as I can recall, gas has always been about $4 a gallon.
Of course, if you’d rather not worry about things like the price of gas, you can always book a cab