A farmer protests fuel shortages in Santa Cruz, Bolivia, on May 8. JUAN CARLOS FERNANDEZ (AFP)
Bolivia suffers a constant bleeding of three fuels: diesel, gasoline and gas. The first two are smuggled into neighbouring countries. The gas is diverted through clandestine private connections or used for illegal electricity production. The cause is the same: low Bolivian prices. Being subsidized, fuels are significantly cheaper than those in neighboring countries or alternative energy options. President Luis Arce initiated an operation to control this contraband "in reverse" in the hope of saving the country $250 million. In response, retailers and major consumers of hydrocarbons are protesting against the restrictions that this plan causes.
A liter of gasoline in Bolivia costs 50 cents, less than half that in Argentina or Brazil, and a third the price of Paraguay, Peru and Chile. The internal values of fuels have been frozen since the end of the last century. At the same time, the international price of oil has gone through many ups and downs. The country was able to easily withstand the increases when it was a major gas exporter and produced most of the gasoline it consumed (diesel, on the other hand, has always had to import it in part, because its fields have only a small amount of heavy oil).
Then, as Arce recently acknowledged, Bolivia's reservoirs "got tired." In 2021, the country had to import almost the same value for gasoline and diesel as it exported for natural gas. And, in 2022, it became an importer of hydrocarbons: it exported 3,400 million dollars of gas and, simultaneously, imported 4,365 million dollars of gasoline and diesel. This mismatch is the main cause of the shortage of dollars that the country suffers in this period. For it, the Government has just enacted a law that authorizes the Central Bank to sell part of the gold of its reserves to obtain the US currency.
Bolivian fuel imports underwent an abrupt change between 2021, when it amounted to 2,120 million dollars, and 2022, the year in which the figure doubled. This jump was due, in part, to the increase in the international price of oil, which climbed from $82 a barrel in September 2021 to $108 in June 2022 (and then fell, but remained above $70 a barrel). It was also caused by the increase in the number of vehicles. The third cause was illegal: an "overdemand" for smuggling into neighboring countries across borders full of clandestine crossings.
So far, it has not been accurately measured how much is lost to smuggling, but the government believes it can save about $250 million by better controlling the borders. "We detected that in 2022 a motorcycle loaded more gasoline than ten tanker trucks," Franklin Molina, Minister of Hydrocarbons, illustrated at a press conference. He said they also identified vending machines that increased their fuel purchases by 100 and 200 percent.
Limit 120 liters per month
The government has mobilized the military and its officials in the Sovereignty plan, which tightens control over domestic fuel purchases. This already existed since the State took over the oil business, but until now it had only been fulfilled very laxly. The mechanism is that consumers, who must be registered in an electronic monitoring system that identifies the license plates of their vehicles, acquire a maximum of 120 liters per month per person. Those who need more must apply for a specific authorization.
Producer groups in Santa Cruz, which is the agro-industrial region of the country, have organized "tractorazos", that is, road blockades with heavy machinery to demand the suspension of restrictions: "At harvest time, a single tractor consumes 600 liters per day" and "we are producers, not processors", were some of the reasons they used.
Gas stations, the only link in the oil production chain in private hands, complained about having received the role of commissaries to prevent smuggling. The government threatened to intervene in gas stations that resist complying with its instructions.
Opposition economists are skeptical about what these actions can achieve. "Reverse" fuel smuggling also occurs in other countries with subsidized prices, such as Ecuador and Venezuela. Several specialists have proposed, as a structural response, the lifting of subsidies that mainly benefit the middle class that owns cars, while maintaining the protection of the poorest. The Government has ruled out this possibility. He prefers to bet on the construction of biodiesel plants, which produce the fuel from soybeans and other vegetables. Some public investments have already been allocated to that, but they are controversial because of their economic efficiency and environmental cost.
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