Fuel Hustle

Business February 14, 2012 2:07 am

Weaving through Cambodia by motorbike, hugging the Vietnam border, I came to some startling realizations. Firstly, I was running worryingly low on gas, even though I fueled up just 20 minutes ago. Secondly, there didn’t appear to be any gas stations for miles around. Finally, the air was sweltering, and I could really use a drink.

At this point, I had just sped past a ramshackle roadside stand, one of many selling what looked like sodas and beer in dusty glass liter bottles, and decided to turn back to take a closer look. In fact, this was not a beverage stand, and the golden liquid filling ancient soda bottles wasn’t a delicious local brew. The proprietor waved a pump in my face and gestured toward my motorbike, and I realized I had found the rural Cambodian entrepreneur’s answer to the corner Shell station. (Bathrooms are over there by the trees.)

Gasoline is more expensive in Cambodia than anywhere else in Southeast Asia because the country imports virtually all of its oil. As a result, informal entrepreneurs began smuggling gasoline from Vietnam—where gas is cheaper thanks to domestic oil production and state-subsidized prices—and reselling it in Cambodia. The lucrative trade has grown into a booming industry—so much so that Vietnamese authorities announced a plan to limit the operating hours of border gas stations and require them to issue receipts in an attempt to combat cross-border gas running. In March 2011 alone, Vietnamese officials seized 520,000 tonnes of gasoline.

Nonetheless, smugglers still find workarounds, exploiting sparsely manned crossings, outrunning law enforcement with speedboats, and bribing border guards. Much of this smuggled gasoline finds its way to dusty mom-and-pop roadside stands dotting city corners and rural roads throughout the country.

As my motorbike guzzled petrol, I asked the proprietor about the source. He smiled sheepishly and shrugged. “I get it from only Cambodian sources—from the gas  station down the street.” Yet gas is 400 riel (USD 0.10) more expensive per liter at the nearest legal station.

“Of course the gasoline comes from Vietnam,” explained Dara, a local motorbike taxi driver. “Some places also mix their gasoline with water or cooking oil, so that makes it cheaper too.”

The fuel found in these ad hoc shops is almost always adulterated, both to maximize profit margins and to maintain steady local prices amid macroeconomic fluctuations. There are few things more reliable than gas prices at the local soda bottle gas stand: 5,000 riel (USD 1.25) per liter. Even during shortages or major global price spikes, the difference in gas pricing per liter might rise by a quarter and change at these stops, even as prices shift substantially at government regulated and licensed gas stations.

Instead, the operators alter the contents of the liquid to match the price. Entrepreneurs with an eye to keeping prices low and margins high mix gas with water, a reliably cheap adulterant, sometimes to the point that the liter of Coca-Cola bottle gasoline you just bought may be relatively potable, though it is not advisable to drink.

That’s why after filling up I needed another dose twenty minutes later. But for many, the price can make a meal’s difference, and Cambodians seem to be willing—or pressured—to take that gamble.

Photo by Daniel Littlewood