In a world where some commentators speculate that there is a glut of energy and distillate products as a result of high oil prices, sliding China demand and a looming global recession, Argentina will take the under: as La Nacion reports, on Wednesday refiners and retailers hiked prices between 7.6% and 9.6%, amid what is shaping up as a historic energy crisis.
In recent days Argentina has been rocked by an unprecedented shortage of gasoline, with drivers running the gauntlet to find scarce supplies of gas to fill their tanks amid what Reuters has called "the most acute fuel shortage in years", which has left many filling stations out of supply and long lines at any pumps still operating.
The South American country, which is a major shale oil and gas producer, has suffered shortages of petrol and diesel since late last week because of domestic refining problems and as a lack of dollars has delayed imports.
Scenes reminiscent of Venezuela in recent years have surfaced across Argentina recently, with cars around the block attempting to fuel up at stations. Jorge Ferro, a 42-year-old consultant in Buenos Aires, tried to fill up his tank last week at an Axion gas station in the wealthy Recoleta neighborhood, but attendants told him they were out of “super” and could only offer 4,000 pesos ($11) of premium gasoline.
“When I told them I was going to go to another station, he told me that all the nearby gas stations were closed,” Ferro said.
Election uncertainty is another big driver behind commuters’ headache. Before the Oct. 22 general election, some gas stations suspended sales as customers tried to stock up on gas, fearing a sharp currency devaluation that looks delayed for now. Economy Minister Sergio Massa faces off against outsider candidate Javier Milei in the definitive runoff vote on Nov. 19. Even after the vote, some stations say they’re entirely tapped out.
Salta sin NAFTA, salteños en busqueda de nafta en la Ciudad de Salta.— Todo Salta (@Todosaltaok) October 25, 2023
Vuelve a sentirse la falta de stock en la tarde de miercoles, por estas horas, las estaciones de servicio de todas las líneas no cuentan con combustible.
Salta without gasoline, Salta residents in search of gasoline in the city of Salta. The lack of gasoline supply is felt again Wednesday afternoon, at this time, gas stations from all brands don’t have gasoline
Meanwhile, Argentina’s acute dollar scarcity is leaving YPF unable to pay for gas imports for now. The retained cargo has a volume of 120,000 cubic meters, which represents 7% of monthly gasoline sales in the country, or about $150 million, one person said. Argentina doesn’t have access to international capital and is struggling to comply with a $44 billion agreement with the International Monetary Fund, its only major source of financing.
That has sparked anger at the government ahead of a second-round presidential election runoff next month between the ruling Peronist coalition's economy chief Sergio Massa, seen as the front-runner, and radical libertarian Javier Milei.
"The truth is that I work with the car and it's like looking for water in the desert," said 38-year-old Cabify driver Raul Paretto. "It is distressing because you don't know on a day-to-day basis what can happen; we are living one day at a time."
Around the capital Buenos Aires, Reuters reporters said that they saw empty filling stations with signs saying no more petrol. In other places, long queues formed and some rationed sales. There were, however, some signs of things starting to improve. "Today they sold me only super, though there was no premium," said self-employed worker Leonardo Villa with his car. "But, well, yesterday there was none anywhere, the day before neither. At least today I was able to fill up."
Furthermore, on Saturday Argentina’s oil and gas producers said in a joint statement that the fuel shortages will “normalize” in the next few days. Argentina said last week it would import 10 tanker fuel ships shipments in coming days to address shortages after a spike in demand, as well as increase refining capacity.
Alas, judging by today's striking surge in prices, any improvement or normalization were at best illusory.
The crisis has gotten so bad that Economy Minister and presidential candidate Sergio Massa warned on Sunday that Argentina’s oil producers will be barred from exports unless they increase fuel supplies to address shortages in the country,
“If the fuel supply is not resolved by midnight on Tuesday, companies will not be able to send out export ships starting on Wednesday,” Massa told reporters in Tucuman province. “Argentines’ oil belongs first to Argentines.”
Massa added that some companies were holding onto fuel supplies on bets the government would devalue the official exchange rate after last week’s presidential elections.
In Argentina's farmlands, producers said a shortage of diesel showed signs of abating too, key for the start of the planting season of soy and late season corn, the country's main cash crops.
"It is not completely normalized but there is a little more supply," Jorge Chemes, the head of the Argentine Rural Confederations (CRA), told Reuters on Monday.
Oil executives cited planned halts at local refineries, which provide 80% of domestic supply, and the country's scarce foreign currency reserves that have held up imports. "It's not a problem of lack of crude oil, the problem is that there's no more processing capacity with the refineries we have in Argentina," one industry source told Reuters. Come to think of it, the US has a similar problem too.
"On top of that, you need dollars to pay for imports and the central bank does not have them. And even when they do import, the refining companies make a loss selling at the pump below the price they are buying," the source said.
But when one strips away all the rhetoric, there is a simple reason behind the country's crisis, the same one behind almost every other crisis: government intervention. You see, in its infinite brilliance, the Argentina's government has fixed a local oil price at $56 per barrel, far below the international price around $86 to try to calm local inflation of nearly 140%. Not only does that skews the economics for firms importing product from overseas, but it creates instant shortages, because one can have "cheap" gas and suffer historic shortages, or one can allow prices to clear through the market... and risk a popular revolt.
Finding themselves between a rock and a hard place, Argentina's largest fuel producers and refiners said in a joint statement on Monday they had presented a plan to the government to bring gas stations back up to full supply and to boost stocks.
"We will use all methods possible to accelerate the unloading of ships with imported fuel, which, like every year, supplements local production," they said.
Local unions backed Massa's position and threatened a strike from Wednesday unless the domestic situation was resolved. They said crude production was at a record and the oil companies were being "opportunistic and petty."
Because once again - and just like in the US - the government's incompetence is the oil companies fault...