Tuesday, May 21, 2024

ECONOMY | 30-10-2023 17:40

Argentina's government pushes oil companies amid fuel shortages, protests

Long car queues to fill up and stations with “no petrol” signs have been part of the landscape in recent days in Argentina; Government pushes oil companies to speed up supply and agricultural producers warn about protests three weeks ahead of the presidential run-off.

Long car queues to fill up and stations with “no petrol” signs have been part of the landscape in recent days in Argentina and the government is pressuring oil companies to speed up supply.

The shortages come with unrest building among car users and businesses. Agricultural producers are already warning about protests just three weeks ahead of the presidential run-off.

The lack of petrol is due to programmed halts in two refineries, a seasonal peak and greater demand from the countryside, a joint press release from the main oil companies stated, which forecast a normalisation of the supply “over the next few days."

Economy minister and ruling coalition presidential candidate Sergio Massa has delivered an ultimatum for companies to speed up distribution, under threat of closing exports starting on Wednesday.

“If by midnight on Tuesday the fuel supply of is not solved, as of Wednesday they won’t be able to get a single export ship out,” he warned on Sunday at a rally in Tucumán.

Yet companies cited “extraordinary demand levels, especially over the last two weeks with a long weekend, an election with peak mobility, the start of sowing time and greater dependency on fuel imports with programmed halts in some refineries, plus excessive demand caused by an expectation of shortages" in a press release challenging the rhetoric.

The government has blamed the shortages on speculation by firms over the result of the presidential election. The next head of state will be defined in a run-off on November 19 that pits Massa against libertarian lawmaker Javier Milei.

“There were some who speculated that according to the electoral result [first round] there would be devaluation, so maybe they hoarded fuel," speculated Massa.

In the presidential first round on October 22, Massa got nearly 37 percent of the votes, followed by Milei with 30 percent.

Milei is running on a platform promising to dollarise Argentina's economy, eliminate the Central Bank and introduce large cutbacks in public spending as a remedy for recession, an annual inflation rate of almost 140 percent and 40 percent poverty.

“The petrol shortages is a postcard of the future Massa will bring us as president,” Milei said in a television interview over the weekend.

In Argentina, the price of fuel is regulated via a pact with the main oil-producing firms that allows for periodic adjustments. The litre of premium petrol is nearly US$1 at the official exchange rate (365 pesos). 

Supply problems started several weeks ago in several cities outside Buenos Aires, and over the weekend they got worse in the capital, where long car queues at petrol stations exhausted what remained in a matter of hours, causingnervousness among consumers.

“They fill up the tank and load more petrol in drums, bottles, anything,” said one worker at a YPF petrol station in Caballito, Buenos Aires.

Argentina produces its own fuel and has recorded record production levels this year. In September alone, 645,500 barrels of oil were produced daily, a seven-percent increase from the same month in 2022, yet supply is not enough to reach demand at peak times.

The Energy Secretariat has announced the import of the equivalent of 10 tankers to tackle bottlenecks.

During the weekend “they already unloaded two ships, and the third one is being unloaded to cater to peak demand,” explained Energy Secretary Flavia Royón, in a radio interview on Monday, promising normalisation of supply in the coming days.

Agricultural employers voiced their concern over the situation on Monday, which complicates the sowing of corn and soy and the upcoming wheat harvest.

“Rather than standing by the tractor until the imported ships arrive, let’s go out on the road to express our outrage,” read a press release signed by several large firms.



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