1960 Caddilac convertible. Big car. Huge tail fins. Terrible gas mileage. Huge gas tank.
Huge gas tank. Because the smugglers use the gas tank to transport their contraband across the border between Venezuela and Columbia.
I heard the story yesterday on BBC in a report by Will Grant, which is partially reproduced at the BBC online. So what are the smugglers transporting in those gas tanks? Gasoline.
Smugglers fill up their tanks with cheap petrol in Venezuela, then drive over the border and siphon it off in Cucuta at huge profit. Having paid a few cents a litre, they can sell it on for several dollars. An estimated 15,000 to 20,000 people make their living from the practice...
A 20-year-old "pimpinero" - as those who siphon off fuel are known - takes the petrol from Juan's car by sucking it out of the tank with his mouth and a hose, seemingly oblivious of any potential health risks.The transaction is successful and Juan leaves with about $7-worth of Colombian pesos for what cost him about 50 US cents in Venezuela.
One other tidbit of "food for thought." When the driver fills up his/her car with gasoline in Venezuela, it costs the equivalent of 50 U.S. cents. Not per gallon. Per tankful. Per 20+ gallons. There's no way I know of to calculate an equivalence value because of dollar exchange rates and labor costs and fuel additives etc., but one can't help but think that there must be enormous markups by American and European oil and gas companies. Chavez probably keeps gasoline cheap as a perk to the people of Venezuela, but still one has to wonder...
It is a wonderful example of how big subsidies can really screw up a market. I even learned about this specific subsidy in economics class in college.
ReplyDeleteYeah. And California is STILL, even after ur budget crisis, the only state that doesn't charge for mineral extraction.
ReplyDeleteFrom this article.
ReplyDelete"Chavez's government won't say how much income it forgoes each year to reduce domestic fuel costs. But the Caracas-based consulting firm Ecoanalitica estimates that Venezuela last year lost US$8.8 billion."
The last time serious gas price increases were proposed in Venezuela (in 1989) people rioted and 300+ were killed.