08 Nov Free market for gasoline and diesel in Bolivia: when the most expensive gasoline is the one you don’t have it
Today, Bolivia’s diesel and gasoline market shows that price subsidy elimination is not only possible but already underway. Many consumers, particularly from major economic sectors, are paying international prices for fuel, recognizing that it’s better to pay more than to halt production. Even YPFB, Bolivia’s state-owned oil company, has joined this trend, reactivating sales of gasoline at market rates. So, what’s happening?
Not all consumers are willing or able to pay unsubsidized prices—especially those in the transport sector. But there is a group, albeit small, that has adapted, understanding that “it’s better to have than not to have.”
If this shift is real, then it’s time to reconsider paragraph VI of Article 17 of the Hydrocarbons Law 3058, which currently mandates:
“The importation of hydrocarbons will be carried out by Yacimientos Petrolíferos Fiscales Bolivianos (YPFB), by itself or through contracts with individuals, entities, public or private, or in association, subject to regulation.”
Here are several reasons why a policy change is needed:
1. Consumer Willingness: As mentioned, there is already a group of consumers willing to pay unsubsidized prices.
2. Reducing Bureaucracy: Importing procedures should be streamlined. Private companies interested in sourcing their own fuel shouldn’t need YPFB’s permission.
3. Profit Transparency: Where are the additional profits from unsubsidized fuel sales going? Are these funds being used to pay higher prices to suppliers?
4. Private Efficiency: It’s plausible that private companies could import fuel more efficiently than YPFB, potentially offering lower prices.
5. Reducing Black Market Influence: Legalizing fuel imports could undercut any existing black market, resulting in lower prices for consumers.
6. Easing Subsidy Pressure: Allowing private imports could alleviate some of the pressure on Bolivia’s subsidy budget for fuel.
With the Hydrocarbons Law nearing its 20th anniversary, it’s time for reform, modernizing Bolivia’s approach to the fuel market—just as we aim to renew our national soccer team with fresh energy.
S. Mauricio Medinaceli Monrroy
October 11, 2024
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