gasoline

Venezuelan crumpling economy brings some relief to Colombia, restricts gasoline smuggling

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Venezuelan economy was struggling long before the coronavirus pandemic hit the Latin American countries and its economic meltdown directly impacted neighboring Colombia. Venezuelan neighbor, which is home to about 2 million Venezuelan refugees, its welfare groups, schools, hospitals had been battling to find a way to deal with the issue. While Colombia has been deep into health, economic, and refugee crisis but it definitely feels relived from one aspect, pulled up gasoline smuggling. As Caracas moves closer to economic collapse, Colombia’s decades-old issue of smuggled gasoline (from Venezuela) has come to a halt. Though interesting the wave is flowing in the opposing direction.

Venezuela is known to have the world’s largest oil reserves and its abundance helped the government to provide huge subsidies, keeping the gasoline price extremely low, contradictory to other nations including Colombia. The Venezuelan oil which cost pennies when imported in Colombia earned dollars by huge margins. Before the government could curtail it, the Colombian border town, Cúcuta was infested with illegal channels for smuggling oil. Eventually, the smuggling industry boomed, which was around the 1970’s, when Arab oil embargo caused rise in gas prices all across the world.

Often the smugglers would drive down to Venezuelan gas stations, fill the gas and later draw it out in Colombia for sale. Smuggled oil was cheaper than one sold at government authorized Colombian gas stations and was easily available at garages, in back alleys, and along highways. A smooth and extensive smuggling channel was not more limited to gasoline as it made way for many more products in Colombia labeled “Produced for the Venezuelan market”.

Colombian government lost millions of dollars in unpaid taxes over unsold gasoline. Marco Arévalo, a former official with Colombia’s Transportation Ministry said that just like

controlling the inflow of illegal drugs, clamping down proved impossible and Colombian authorities started exploring the other ways to curtail it.

Arévalo, one of the drivers told the NPR, “There were hardly any gas stations left in Cúcuta because it wasn’t a viable business.” Arévalo said that years after the smuggling boom there came in a series of reports of explosions caused by gasoline. He said at least 20 people in and around Cúcuta, a Colombian border town, were killed in explosions as they transferred gasoline into car tanks. The gasoline smuggling started dwindling as the Venezuelan smuggled out was dangerous and not refined. But this hidden virtue for Colombian authorities gave rise to another issue. The smuggling industry provided unemployment to many people but now around 1,300 smugglers on the Colombian side of the border were out of work.

The Colombian government came to their aid by forming a business cooperative to help former smugglers find legal work. These cooperative loaned them funds needed to start a small business.

Meanwhile, in an interesting turn of events reports surfaced revealing how the contraband gas was now starting to flow in the opposite direction, with people taking Colombian gas into Venezuela. NPR reported: “It’s been going on for the past two or three months because gasoline is so hard to find in Venezuela.”

Caracas economist Jose Manuel Puente said, “At a time when the world is literally swimming in gasoline” from pandemic-caused surpluses, Venezuela’s shortage is a cruel paradox. The key onus of this economic catastrophic goes to highly corrupt Venezuelan leaders who had been dragging the country into hyperinflation and recession with their mismanagement for the past six years.

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