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Last Updated: Monday, 10 May, 2004, 07:41 GMT 08:41 UK
Venezuela smugglers enjoy free fuel
By Mike Ceaser
In San Antonio, Venezuela

For decades, authorities have tried in vain to stop the flow of cocaine across this border from Colombia into Venezuela. These days, it is a new fight they are losing - petrol smuggled in the other direction.

Cars line up to buy petrol
People queue for hours to buy cheap petrol
Recently, the Trebol petrol station in this town - squeezed against the Colombian border - had a five-block line of cars waiting to fill up, while a pair of National Guardsmen tried to check drivers were not taking more than their share of Venezuela's almost free petrol to sell it across the border in Colombia.

Many of the cars were beaten-up, decades-old Fords and Chevys with 80 and even 100-litre tanks.

"Things are a little bit tough," admits Jon Jairo, who sat in his white '78 Chevy holding a beer on the seat beside him.

"I'm a cabbie, but sometimes I sell a little petrol."

Smuggling flourishes, despite the rationing of supplies to petrol stations and the regular confiscation of the traditional 'car bombs' - vehicles whose tanks are expanded into the trunks and back seats to carry as many as 300 litres and which earned their name by occasionally exploding during transit.

On the Colombian side of the border, roadside vendors called pimpineros wave funnels to advertise their jug-fulls of Venezuelan petrol.

Free fuel

The problem's cause is simple.

Shell petrol station
Shell plans to close its petrol stations
Venezuela, which is a member of the Opec cartel of petroleum exporting countries, has traditionally supplied its people with cheap fuel.

But the bolivar currency's steep devaluation in recent years has made inexpensive petrol almost free, fuelling a vigorous smuggling business across the border from Venezuela into Colombia, where leaded fuel costs 16 times as much.

"We poor people live off of this business," says Victor Julio Torres, standing on a Colombian roadside among jugs of Venezuelan petrol.

"If it weren't for this, the poverty would be even worse."

Government attempts to control the problem have forced up contraband petrol prices in Colombia, but not dampened the business.

Instead, corrupt officials prepared to look the other way have benefited.

Vendors, who earn about $3 per day, complained that they have to pay bribes to police and customs officials in both nations, as well as taxes to the outlawed paramilitary forces who control this region.

National burden

Things were not always this bad.

Roadside 'pimpineros' selling petrol
Roadside 'pimpineros' sell cheap petrol
When President Hugo Chavez took office in 1999, unleaded fuel cost a modest US 12 cents per litre.

But since then, the price has remained fixed at 70 bolivars per litre and the bolivar has lost 80% of its value against the US dollar.

This has pushed the price down to US 2.3 cents per litre - about one-fifth of the costs of production.

The petrol give-away costs the nation more than $2bn annually, say economists - money which otherwise could be invested in health, education or the police.

The subsidy also contradicts the values of President Chavez's "Bolivarian Revolution for the poor", since it is the wealthy who receive most of its benefits.

And the subsidy drains the state petroleum company, Petroleos de Venezuela, known as PDVSA.

Observers say that PDVSA has never completely recovered from a December 2002 strike intended to force out the leftist Mr Chavez.

Since then, only strong world prices have kept PDVSA afloat, says Jose Toro Hardy, who was on the company's board of directors from 1995 until Mr Chavez's election.

Crisis ahead

But when petroleum prices drop, "the Venezuelan state will confront a monumental fiscal deficit", Mr Toro Hardy predicts.

Meanwhile, by financing wastefulness the gasoline subsidy feeds huge traffic jams and encourages the use of inefficient, pollution-spewing vehicles which poison cities' air.

A 12-year-old boy transports petrol on his bicycle
Even children are involved in petrol trafficking
"Certainly, we're worried by the fact that in Venezuela there is no reason to conserve," says Marieta Hernandez, president of the Venezuelan Audobon Society.

"Besides the fact that there are too many cars, they are in very bad condition."

Yet, while prices of everything else - from bread to milk to eggs - leap by double digits, petrol prices appear sacred.

Threatened with a possible recall vote on his rule, the last thing Mr Chavez wants to be accused of is raising beleaguered Venezuelans' cost of living.

And politicians remember that a mild petrol price hike helped trigger huge riots in 1989 which led to hundreds of deaths and helped cut short the president's mandate.

Withdrawal

Venezuelans consider dirt-cheap petrol as much a part of their culture as beauty queens - even if it is as destructive as an oil spill.

Roadside pimpineros selling petrol
Many poor people rely on the money they make from selling petrol
"We deserve cheap petrol because we produce fuel here," says Mary Urbina, who had pulled into a downtown Caracas Shell station to fill up her 1987 Jeep Wagoneer.

"The price is excellent."

But Ms Urbina will not be able to purchase Shell petrol much longer.

Squeezed between rising costs and a frozen price, Shell recently announced that it will withdraw from Venezuela's retail market.

"The process of turning petroleum into fuel, the labour, the machinery, is expensive," says Shell station manager Jose Avendano.

"But the petrol is free."

He observes that less than a litre of distilled water for batteries costs a thousand bolivars, 15 times the price of petrol.

Enduring industry

And so, along Venezuela's borders a futile fight against the smuggling continues.

Pimpinero Torres watches the Colombian vehicles pass by, each a potential customer.

"To end this business, they'd have to equalise the price of petrol," he says.

He needn't worry.


SEE ALSO:
Possible date for Venezuela vote
21 Apr 04  |  Americas
Venezuela: Chavez's key backers
19 Mar 04  |  Americas
The big five opposing Chavez
18 Mar 04  |  Americas
Profile: Hugo Chavez
16 Mar 04  |  Americas
Venezuela's economic legacy
29 Jun 03  |  Business


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