Until June 2025, Bolivia was once again facing an all-too-familiar crisis: endless gasoline lines stretching for hours across major cities, rationed diesel distribution, and black-market prices that soared well above the official rate. Government officials call it a “temporary shortage” caused by logistical delays. But Bolivians standing in line for three hours under the sun know better. This is not a crisis of transportation, it is a crisis of central planning.
Undeterred by reality, the government insists that “We have made every effort, and starting Monday, May 26, we will fully regulate fuel supply.” Regardless, scarcity is still very present after the 26th. The government blames everyone but itself—from the “evil speculators” to the sea tides. But the truth is painfully obvious to anyone who understands basic economics: when the price of a good is set below market-clearing levels and access is politically regulated, demand outstrips supply. The result? Artificial scarcity, bureaucratic chaos, and the suffering of ordinary people.
A Subsidized Time Bomb
The government of Evo Morales nationalized Bolivia’s hydrocarbon sector in 2006 with Supreme Decree 28701, regaining near-total control over the country’s natural gas and petroleum industries. For years, the state fed its growing deficit with natural gas exports—without making new explorations, without private incentives to keep the industry efficient, and without long-term planning. Even President Arce said the following:
In 14 years (of the Morales administration), no more than four exploratory gas wells had been drilled in the country, none of them successful,” he added that the nation “had been eating up its gas.
And it is no surprise that eventually, the natural gas reserves—which had been feeding the unsustainable and inefficient government spending for years—had run out.
That takes us to the problem of subsidized prices. Bolivia has subsidized fuel for decades. The government imports refined gasoline and diesel, selling it domestically at a fixed low price, and absorbing the difference. In fact, an official note from the government noted that they spent around $US 2.000 million in fuel subsidies in 2023.
For years, high natural gas exports paid for this political indulgence. But now that the money’s gone and natural gas has been depleted, it’s the people who pay for the consequences.
The government pretends it can maintain price controls forever, but reality has a way of catching up. The central bank’s foreign reserves are nearly depleted. The boliviano trades officially at 6.96 per dollar, but in the black market it’s already pushing 17-20. As the government runs out of dollars to import fuel, the shortages deepen. Ludwig von Mises warned:
Economics does not say that isolated government interference with the prices of only one commodity or a few commodities is unfair, bad, or unfeasible. It says that such interference produces results contrary to its purpose, that it makes conditions worse, not better, from the point of view of the government and those backing its interference.
Price Ceilings and Political Cowardice
In a free market, rising prices would signal scarcity, incentivize imports, and allocate fuel to those who value it most. But Bolivia’s government would rather sacrifice the economy than lose face, instead of fixing the cause, politicians attack the symptoms.
Rather than liberalize fuel markets or lift restrictions, the government blames hoarders, smugglers, and “neoliberals.” With constant apologies, no solutions, and many excuses, the government refuses to see the heart of the problem. The minister of hydrocarbons lamented the “Adverse factors, speculation, which generates psychosis, because there are drivers who, even with a quarter or half tank of fuel, go to stations, and that affects the normalization of supply.” And, of course, now being in economic uncertainty, unable to drive to work or having to do 3 hours of line to be able to get gasoline at all is “psychosis.”
Speculators—scapegoated by authorities—are not villains but necessary agents of adjustment. Their actions are not only natural, but they are a necessary signal of real prices and supply constraints. Black market prices increase and gasoline is resold at higher prices. In a free market, not constricted by the state, this would be the natural signaling system, as prices increase supply follows. But with a system that has no free importation of fuels, when the only increase of supply can come from a government that has no money to purchase and import fuel, the natural signaling system of prices is condemned as “evil speculation” and “psychosis” when in reality it is the market screaming for change.
Authorities even blame ocean tides and the weather for the irregular and delayed fuel shipments. The manager of YPFB (Yacimientos Petrolíferos Fiscales Bolivianos) declared:
A first attempt was made, but the ocean current and winds prevented the vessel from being properly and safely positioned. Two more attempts were made to allow the vessel to be safely positioned so that the accessories could be connected to land and the fuel transported to the tanks in the city.
When the regime blames the sea, you know the bureaucracy is running on fumes.
A Crisis of Control, Not Capacity
For Bolivians, this chaos is not theoretical. It’s the mother waiting four hours to fill a tank so she can take her child to school. It’s the taxi driver who loses a day’s wages in line. It’s the farmer whose products rot while he waits for diesel to transport it. This is not just inefficiency—it is theft of time, energy, and human dignity.
Bolivia’s gasoline crisis is not due to a lack of fuel. It is caused by a lack of freedom. The state insists on managing supply, controlling prices, and dictating who gets what. But the more it tightens its grip, the more the system falls apart.
In an ever-widening economic crisis, with accelerating inflation and multiple shortages, the inability to secure basic fuel becomes one more symptom of the collapsing socialist system.
There is only one long-term solution: liberalize fuel imports, remove price controls, and let markets do what governments cannot—coordinate supply and demand efficiently. Until then, Bolivia will remain trapped in a cycle of intervention, crisis, and decline. As Henry Hazlitt wrote in “The Dangers of Price Controls”:
Price fixing and wage fixing do harm even if there is no inflation. In a free economy prices are constantly changing. They are changing to reflect changes in supply and demand, in costs, and in a hundred other conditions. Some prices are going up; other prices are going down. If an effort is made to freeze these prices and wages and costs exactly where they are, it immediately disturbs the relationship of prices and comparative profit margins which decides what things will be made and what quantities they will be made in. It upsets the process by which the free market decides how thousands of different commodities and services are to be made in the proportions in which people want them.
The lines at Bolivia’s gas stations are not a mystery. They are the predictable outcome of bad economics, populist cowardice, and socialist delusion. The sooner the country abandons these myths, the sooner it can begin to rebuild.
