"Please Don't Panic Buy": France Taps Strategic Reserve After Gas Stations Run Out Of Fuel

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by Tyler Durden
Wednesday, Oct 05, 2022 - 07:00 PM

There are "emergency" reasons to drain one's petroleum reserve - like, for example, approaching midterm elections that give you absolutely no right to drain a country's strategic reserve but you do it anyway in hope of picking up some votes from idiots who don't realize that gas will soar to record highs right after the elections - and then there are emergency reasons.

The Biden administration, of course, is dealing with a the quote-unquote emergency...

... while France is about to get hit with a bad case of the real deal.

Several days after we learned that gas stations in France have run out of gasoline due to long-running oil refinery strikes, today the French government said that France has tapped its strategic fuel reserves to resupply petrol stations that have run dry, amid ongoing strikes by workers that have stunted refining production and blocked gasoline deliveries.

Government spokesman Olivier Veran acknowledged "tensions" but said there was no shortage of fuel stocks on a national level. He urged consumers not to panic-buy, which of course is the surest way to encourage panic buying, long lines, rationing and all the ugly scenes from those black and white photos of the 1970s.

In the hardest-hit Hauts-de-France region, authorities didn't even bother with rationing and banned outright the sale of petrol and diesel in jerry cans and other portable containers.

"We are obviously monitoring very, very closely the situation together with the operators and, here and there, when it was necessary, we have used our strategic stocks to enable the stations to be supplied," Veran told reporters.

A walkout by hard-left CGT trade union members at TotalEnergies has disrupted operations at two refineries and two storage facilities, while two Exxon Mobil refineries have faced similar problems since Sept. 20. The industrial action has left more than 60% of France's refining capacity offline.

Veran said roughly one in every 10 service stations nationally were experiencing some shortages, but that in the north the figure was closer to one in every three.

The silver lining: the UFIP petroleum industry body said the shortages at fuel pumps were due to logistics and not insufficient supplies. "There are no shortages in supply due to the strikes," a UFIP spokesperson said.

The CGT trade union is demanding a 10% salary increase from TotalEnergies to help catch up with soaring inflation, a massive investment plan and the hiring of temporary workers, said union delegate Thierry Defresne. So far, management has refused a catch-up salary increase for 2022, and wants only to negotiate 2023 wages, he added.

The UFIP has previously said France has enough strategic reserves of oil products to cover average demand for about three months. TotalEnergies has said it has increased imports and has additional stocks "that could last between 20 days and a month."

After that France will be effectively paralyzed, only it won't be Putin's fault but the labor unions.

It gets worse: outages in France's refining sector are creating uncertainty in the refined oil trade amid a heavy oil refinery maintenance season in Europe this autumn. "The strikes continue unabated", the union said in a statement on Wednesday evening, adding "the wage negotiations are far from over."

A few more weeks of this chaos, and it won't matter if the unions reach a deal: France will be out of strategic reserves for good and every incremental barrel will cost so much more.

And while we commiserate with the French, we can only hope that Biden will look at what is going on in France and grasp what a true emergency looks like and why draining the SPR for purely selfish reasons will backfire spectacularly...