Fuel Shortages Reappear Across Bolivia, Rattling New US Ally

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(Bloomberg) — Bolivia is running out of fuel again, challenging a new government that had vowed to fix the economy after two decades of socialist rule.

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President Rodrigo Paz, part of a wave of Latin American right-wing leaders allied with the Trump administration, is struggling to replenish fuel, contain social unrest and tame a budget deficit that threatens to widen on the back of fuel subsidies. The global oil price surge caused by the Iran war has made the subsidies far more costly to maintain. As natural gas exports that once sustained Bolivia’s economy dwindle, the government doesn’t have enough revenue to import more fuel and dollars are scarce. 

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On the streets, patience is running out too. Truck drivers demanding diesel were blocking a main avenue in the political capital of La Paz on Thursday after waiting days to tank up. Carlos Chuquimia, 34, was inside the tiny cabin of his vehicle with his wife and two children, ages two and four, bracing for a third cold night at 3,665 meters (12,024 feet) above sea level.

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“Here I am with my family because otherwise what are we going to do? A hotel would mean more money from our pocket,” said Chuquimia, who’s from Cochabamba in central Bolivia. “The fuel station doesn’t know anything. I’d like this to be solved right away.” 

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After taking office in November, Paz is already at odds to retain some of the technocrats he installed in a bid to shake off cronyism and corruption. The president of Bolivia’s state-owned Yacimientos Petrolíferos Fiscales Bolivianos SA, or YPFB, former local Petrobras executive Claudia Cronenbold, resigned early Wednesday, saying the institution is in a “significantly worse condition than expected.” 

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Hours later, Paz swore in new Hydrocarbons and Energy Minister Marcelo Blanco Quintanilla after his predecessor Mauricio Medinaceli stepped down following turmoil over gasoline quality problems.

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The new YPFB head, Sebastián Daroca Oller, promised to gradually stabilize supply, adding that “together with verifying fuel quality, we assure there will be no increase in established prices.” 

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That’s going to be hard as the ongoing closure of the Strait of Hormuz keeps global oil prices well above Bolivia’s subsidized pump prices, despite hefty increases in December, including a 160% hike for diesel. New pump price adjustments are supposed to take place in June.

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The government’s 2026 budget is based on an oil price of $64.50 a barrel, around two-thirds of international levels.

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Although the private sector is authorized to import gasoline and diesel, it’s cheaper for companies to buy fuel from YPFB, highlighting market distortions that Paz would risk a backlash by dismantling. 

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Daroca told state-owned TV on Friday that a new crude supply contract would allow YPFB’s two underutilized refineries to boost domestic fuel production in 60 to 90 days.

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The government closed 2025 with a 12% fiscal deficit and projects a 9.2% deficit this year, with 15% inflation and negative GDP of 1.3%. Bolivia is poised to become a natural gas importer as early as 2028.