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Smugglers are loading up their cars and selling Venezuela's cheap gas just next door in Colombia.
He is waved through Venezuelan immigration, crosses the Simon Bolivar Bridge and, 50 yards past Colombian customs, turns down a dirt track where he swings into a dusty lot lined with rickety wooden shacks that shelter hundreds of plastic containers.
Minutes later, the 13 gallons of gas he bought for $1.90 in Venezuela have been siphoned off and Carlos is paid $40 — a staggering 2,100 percent profit for half an hour’s work.
“I do this almost every day,” said Carlos, who did want to give his real name because of the illegal nature of the activity. “It really helps to supplement my income.”
Venezuela has world's cheapest gasoline, which its government is believed to be subsidizing to the tune of $8 billion a year. A gallon of 95-octane gas sells for 18 cents per gallon, while 91-octane costs just 12 cents per gallon. In contrast, in Colombia, where the price is set by the free market and which has less oil, gasoline sells for around $4.15 per gallon. Throw into the mix a black market exchange rate (another thriving business in this border area) that reduces prices by a further two-thirds, and it’s easy to see how contraband gas has become such a lucrative business here.
The most obvious solution would be to raise the price of gasoline in Venezuela. President Hugo Chavez pondered a rise earlier this year but the measure is considered tantamount to political suicide in Venezuela, which has experienced bloody riots in the past after price hikes.
The border region’s economy is becoming increasingly dependent on the illicit trade. “This used to be a coffee growing region but now lots of producers make a living from smuggling gasoline,” said German Duarte, president of Transport Workers Union in Tachira, Venezuela. “It's difficult to find people to work on the coffee farms.”
A 2007 study by the Ministry of Transport estimated that as many as 70 percent of cars crossing the border between San Antonio and Cucuta are smuggling gas. The thousands of gallons smuggled across each day provide no monetary benefit to the Venezuelan state, said Rafael Ramirez, president of Petroleos de Venezuela, Venezuela’s state-owned oil company.
Rather, it is often local officials who benefit financially from their active involvement in the business. At gas stations around town, National Guardsmen can be seen manning the pumps while cars pass with relative freedom across the border. Carlos said small-time smugglers such as himself did not have to pay the National Guard but that larger containments did.