A massive flow of smuggled fuel from Ecuador into Colombia is benefiting drug traffickers who use it to produce cocaine and to gas up boats moving drugs.
Ecuador’s Ministry of Economy and Finance calculates that about 114 million gallons of gas are unaccounted for each year and that gas consumption far outstrips demand in border provinces, including three along the Colombia-Ecuador border: Carchi, Sucumbíos and Esmeraldas. Residents of border provinces consume 14 gallons of gasoline per month per person, whereas those in the interior consume just ten gallons, El Universo reported.
Gasoline smuggling generates an annual loss of $212 million, the ministry reported early November. The figure was released after the government claimed that $400 million was lost to smuggling -- a loss it used to partially justify eliminating an expensive fuel subsidy. The elimination of the subsidy, however, set off days of violent protests in mid-October, and the law was ultimately scrapped by Ecuadorean President Lenin Moreno.
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The subsidy keeps the price of gasoline in Ecuador about $1 lower than in neighboring Colombia, benefitting smugglers. In Carchi, an Ecuador province along Colombia's southwestern border, some 34 illegal paths are used to move contraband and more than 6,000 residents are involved in gas smuggling.
The most common smuggling method has been dubbed “hormigueo," or "anthill," where smugglers fill fleets of cars with gas in Ecuador and then drive them across the border to Colombia. In another border province, Sucumbíos, crude oil is siphoned off through holes drilled into pipelines. It is then transported through clandestine land and river crossings.
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Fuel smuggling from Ecuador to Colombia may be increasing for two reasons: Colombia's cocaine production remains at an all-time high, and the collapse of Venezuela's oil industry could be forcing drug traffickers to find another source of gasoline.
Colombian authorities estimate that a quarter of the gasoline sold in the country in 2018 went to cocaine production. An estimated 284 liters of gasoline are needed for every kilo of coca paste. Cocaine production also often requires the use of large generators.
According to Colombia’s Fiscal Police and Customs, more than 1 million gallons of gasoline are smuggled into the country daily, with most of the fuel entering through the country’s border with Venezuela. However, Venezuela's oil production has plunged amid the country's economic crisis.
Oil sector workers claim that Venezuela’s gasoline needs amount to about 500 thousand barrels daily. However, since the end of 2018, the state-owned oil company has only managed to produce 300 thousand, requiring it to import the rest. Additionally, the situation has been exacerbated by bans imposed by the United States on importing oil and refinery products.
As a result, there has seemingly been a massive drop off of smuggled fuel from Venezuela into Colombian border regions, including the departments of La Guajira, Arauca and Norte de Santander. In Norte de Santander, towns known to be hotspots for fuel smuggling have seen a massive decrease in “pimpineros,” small-time traffickers who sell gasoline from plastic containers and tanks hitched to the backs of trucks and motorcycles. Some three thousand people in this informal economy have been left without work.
The president of Ecuador's Association of Gas Station Owners in Guayas, Leonardo Alvarado, says that maritime smuggling accounts for the the majority of gasoline moved from Ecuador to Colombia. In Esmeraldas, along the Pacific coast, motorboats haul between 2,000 to 5,000 gallons in drums that are then dropped off in Tumaco, just north of the Ecuador-Colombia border. The gasoline smuggled by boat is mostly used to fabricate precursor chemicals needed to produce cocaine.