Markets in everything, law of one price sucking arbitrage edition

The relationship between Colombia and Venezuela has long been a tense one, but there is still arbitrage across the border.  You may recall, of course, that Venezuela has heavy gasoline subsidies and thus cheap fuel:

On arrival in Colombia, he found a stall set up by the side of the road where he regularly sells his fuel.

A 20-year-old "pimpinero" – as those who siphon off fuel are known – takes the petrol from Juan's car by sucking it out of the tank with his mouth and a hose, seemingly oblivious of any potential health risks.

The transaction is successful and Juan leaves with about $7-worth of Colombian pesos for what cost him about 50 US cents in Venezuela.

Recently, Venezuelan Energy Minister Rafael Ramirez announced that Venezuela would not be renewing an agreement on subsidised fuel with Colombia.

Here is the full story and I thank Stan T for the pointer.


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