La Paz, August 24, 2026 – Amidst the country’s persistent diesel supply crisis, there are two structural causes that must be kept in mind to understand the magnitude of the problem:
1. The Consumption Matrix: Diesel consumption in Bolivia is distributed primarily among three sectors: transportation (more than 80%), agribusiness (~15%), and mining (~5%). This demonstrates that the dominant sector in demand is passenger and freight transport.
2. Zero National Diesel Production: Bolivia is traditionally a gas-producing country rather than an oil-producing one, and Law 3058 has strongly discouraged the exploration and exploitation of liquid hydrocarbons through the application of excessive, fixed, and blind taxes (IDH).
Consequently, despite being a historical gas exporter, Bolivia is forced to import close to 95% of its diesel to supply the domestic market. In principle, this is not a tragedy in the global economy: many countries import the fuels they do not produce, such as Chile and Uruguay in the region, or almost all European nations.
However, this situation becomes highly burdensome and painful for state economies when the country lacks sufficient foreign exchange to guarantee continuous supply and, to make matters worse, keeps consumer prices artificially low.
This is precisely what is happening in Bolivia today: the State does not have enough foreign reserves—spending more on importing fuel than it earns from exporting gas to Brazil—and maintains a diesel price subsidy that acts as a perverse incentive for smuggling the fuel to neighboring countries, where the price can double. If we add to this the sustained increase in the international price of a barrel of oil due to conflicts in the Middle East, we find ourselves facing the ideal conditions for a perfect storm.
In light of this diagnosis, it is evident that Supreme Decree 5676—which establishes (thanks to a “clarification” by the relevant ministry) two differentiated markets for diesel, one for “large consumers” and another for general transportation—completely fails to prevent this storm. On the one hand, it does not stop the hemorrhage of foreign currency, since it maintains the subsidy for the bulk of consumers (transportation), and on the other hand, it continues to encourage fuel leakage through smuggling. In fact, the protest by the sectors affected by DS 5676 stems more from the discrimination they feel subjected to by the aforementioned decree than from the price increase itself.
Facing this scenario, there are only two paths:
- The path to collapse: Continuing to apply blood transfusions to a patient suffering from constant hemorrhages, increasing public debt day by day.
- The path to the operating room: Realistic pricing of fuels once and for all and mitigating social impacts through smart, targeted subsidies.
Looking to the future, it is imperative to remove the root causes of this crisis by promoting new investments in exploration and exploitation, liberalizing the commercialization of imported fuels, and decreasing diesel dependence in all niches where it is technically and economically viable. A clear example is the mining sector, which could perfectly well replace the diesel it consumes with electricity by extending transmission lines to processing plants and remote mining centers.
Best regards,
Francesco