Venezuela's Fuel Shortage Upends Longtime Colombian Border Gas Smuggling Trade

Venezuela's worst economic meltdown in history has had a huge impact on neighboring Colombia, where hospitals, schools and welfare agencies are dealing with 2 million Venezuelan refugees. But the crisis has produced at least one silver lining for Colombia: the curtailing of gasoline smuggling.

For decades, Colombian motorists along the border eschewed gas stations to fill their tanks with cheaper, smuggled Venezuelan fuel. The practice gave rise to powerful smuggling mafias while local governments lost out on gasoline taxes.

Now, however, Venezuela's oil industry has collapsed. Many of its refineries have shut down while the government's lack of cash to import gasoline, combined with U.S. sanctions targeting the oil sector, have led to chronic fuel shortages. That means Venezuelans now pay as much as $10 a gallon on the black market and that there's no more cheap fuel left to resell in Colombia.

"The business has totally died," says José López, a former fuel smuggler in the Colombian border city of Cúcuta who now runs a car wash.

Gasoline smuggling here took off in the 1970s when the Arab oil embargo led to a spike in gas prices in much of the world, including Colombia. By contrast, Venezuela, which is home to the world's largest oil reserves, kept prices artificially low with heavy government subsidies. Filling a car tank cost pennies.

As a result, smugglers made huge profits by reselling gas in Colombia. Often, they would fill up cars and trucks at Venezuelan service stations then drive to Colombia and siphon the fuel into storage tanks. Smugglers also used dozens of clandestine trails, hauling fuel across the border on motorcycles, bicycles, mules and handcarts. Then, like moonshiners, they would sell it out of plastic jugs from garages, in back alleys and along highways.

Contraband gas provided jobs to poor families on both sides of the border. But it also swelled the coffers of Colombian guerrillas and drug-trafficking groups that were involved in the business, says Victor Bautista, the top border official in Colombia's Norte de Santander department, which abuts Venezuela.

Smuggling gas and purchasing it is illegal. But like stopping the flow of illegal drugs, clamping down proved impossible and Colombian authorities often looked the other way, says Marco Arévalo, a former official with Colombia's Transportation Ministry.

Arévalo points out that local and state governments along the border were deprived of millions of dollars in gasoline taxes that could have gone toward building roads and schools. The business also gave Cúcuta a chaotic feel with street-corner venders perched atop containers of gas, waving funnels and hoses in the air to attract customers.

"There were hardly any gas stations left in Cúcuta because it wasn't a viable business," Arévalo says.

There were also accidents. Arévalo says that at least 20 people in and around Cúcuta were killed in explosions as they transferred gasoline into car tanks. One smuggler who barely escaped death was Álvaro Albarracín, who operated a clandestine warehouse in the city where he kept dozens of fuel containers stacked against the walls.

"I was filling up a car tank and then, at one point, there was a spark from a cellphone. Boom! The whole place caught fire," he says.

What finally forced Albarracín to stop after 15 years of smuggling and selling contraband gas was the supply problem.

"For the past year or so there has been no Venezuelan gasoline," he says.

Albarracín and about 1,300 other smugglers on the Colombian side of the border were thrown out of work while long lines began forming at the few legal gas stations still operating in Cúcuta. The Colombian government responded by forming a business cooperative to help former smugglers find legal work.

The co-op provides small loans to help them start small businesses, like motorcycle repair shops and bakeries. Others have been hired to work at a newly opened chain of filling stations, run by the co-op, that have sprung up along the border.

As he pumps diesel into a tractor trailer at one of the stations, rookie employee Victor Estupiñán recalls that when he smuggled gas, he was once arrested and had to pay a large fine. Though he now earns less money, he says: "I prefer this job because I'm no longer viewed as a criminal."

Some Colombian motorists along the border grumble that they must now pay about twice as much for Colombian gas at service stations than they did on street corners. But taxi driver Levi Tarazona points out that contraband fuel was sometimes adulterated and caused engine damage. He claims that Colombian gas is cleaner.

Meanwhile, the collapse of gas smuggling has been a boon for filling stations. A few years ago, there were only four in Cúcuta, a city of nearly a million people. Now, there are 39 stations.

And in a bizarre twist, Albarracín, the former smuggler, claims that contraband is starting to flow in the opposite direction, with people taking Colombian gas into Venezuela. He says: "It's been going on for the past two or three months because gasoline is so hard to find in Venezuela."

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