Fuel shortage in Lebanon deepens economic crisis

BEIRUT – It’s been over a month since Lebanese drivers started stand in line in their cars for hours to get gasoline amid fuel shortages. This added to the many crises the Lebanese are already going through, leaving them even more suspicious of their future.

He has become commonplace seeing long queues in the streets near gas stations and cars stopped along the route because they were out of fuel. Meanwhile, plastic tanks that had been filled with gasoline and stored in homes sparked fires in Residential areas, and there was at least one incident where a car caught fire, at the airport parking lot on June 17th.

Petrol station employees became the targets of almost daily attacks, and some stations have closed or only opened early in the morning, while others have chosen to ration fuel so that more customers can at least get gasoline.

A black market has merged where gasoline and diesel are sold at high prices, and some workers have accepted bribes from drivers in search of additional fuel.

Security forces have been deployed to many stations due to incidents that have resulted in deaths and vandalism. A person was killed in a shooting sparked by fuel shortages in the city of Benin, Akkar, northern Lebanon. In Tire, in the south of Lebanon, the petrol pumps were damaged at a train station. One person even removed the fuel pump hoses forcing workers to refuel their cars.

Officials in the hydrocarbon sector said the crisis was due to the lack of dollars for the Central Bank of Lebanon to import fuel. In recent weeks, the import of fuel has become limited and does not meet the needs of the market. Fuel smuggling in Syria also caused the exhaustion of the country’s fuel stocks.

The Central Bank supports the import of fuel by paying 90% of its price at the official exchange rate of 1,515 Lebanese pounds to the dollar, and the remaining 10% is guaranteed by importers in black market dollars, where the value of ‘a dollar has exceeded 15,000 pounds this week.

Four liters of gasoline – just over a US gallon – is about 8,700 Lebanese pounds (about $ 5.75 at the official rate or 57 US cents at the black market price) compared to about 4,600 Lebanese pounds ($ 3 at the official rate). official rate) before the economic crisis. crisis erupted in 2019.

Central Bank Governor Riyad Salameh has repeatedly warned that commodity subsidies will end when the bank’s minimum reserve requirement of $ 17 billion is reached and called on the government to streamline subsidies.

The Lebanese people fear that the fuel crisis is worsening and that there is an increase in clashes and the use of firearms at gas stations. Fears of crime and murder have grown; a big fear is that if fuel subsidies end and prices rise even more, many people will not be able to afford to use their vehicles.

Lama Hachem, 29, a Lebanese housewife and mother of two, told Al-Monitor: “I was afraid to go to the gas station because a fight could break out and we could be killed by a stray bullet. When I have to go to the gas station these days, I don’t take my kids with me. The worst part is that we will no longer be able to buy fuel when the subsidies are lifted.

Lebanon is grappling with the worst economic and monetary crisis in its history. Its national currency against the dollar collapsed and more than half of the population became poor.

On June 17, Acting Minister of Energy Raymond Ghajar announced that fuel subsidies will eventually be lifted and higher prices will lead to lower demand for fuel.

Ghajar said: “Those who cannot afford 200,000 Lebanese pounds [about $132 at the official rate or about $13 at the black market rate] because a tank should stop using a car and use something else.

Ghajar’s declaration aroused anger many Lebanese who saw it as a contempt for the scale of the crisis, as there are few alternatives available. There is no reliable public transport network, as public buses are considered dangerous and disorganized; most people get around with their own car. The use of taxis is a possibility, but their prices will undoubtedly have to increase due to the high price of fuel. The cost of transport could exceed the capacities of many Lebanese workers, who are generally poorly paid; the minimum wage is now the equivalent of $ 50 per month at the black market rate.

Lebanon has a rail network, but its trains are rusty and dilapidated and the system has been considered to be deceased since the 1990s.

Ahmad Tamer, director general of the Land and Sea Transport Directorate, told Al-Monitor: “I think the concerns of the people are justified. In order to improve public transport, there must be cooperation with the private sector to implement a plan and conduct studies.

Recently, many people have replaced their cars with motorcycles and others with tuk-tuks (small three-wheeled vehicles) because they use less fuel.

Hadi Sahaaban, 24, a university student who works as a security guard in Beirut, told Al-Monitor: “I replaced my car with a motorcycle due to the fuel shortage. My salary is 1 million Lebanese pounds [about $66 at the black market rate] per month, which will not be enough to fill up with gasoline if the subsidies are lifted.

George Brax, member of the Service Station Owners Union, told Al-Monitor: “There are two basic conditions for the availability of fuel at service stations. First, the Central Bank must guarantee fuel imports on a constant and continuous basis, and second, the government must ensure the delivery of fuel directly to stations. Otherwise, the crisis will not end.

Currently, distribution companies distribute the fuel to service stations, but large quantities are smuggled into Syria.

Brax said: “Lebanon consumes an average of 6-7 million liters of gasoline per day.

He added: “The last proposal of the governor of the Central Bank was to adopt the rate of 3,900 Lebanese pounds to the dollar by subsidizing fuels at 100%, instead of adopting the rate of 1,515 to pay 90%. the price of fuel. The price of a can of gasoline would then be between 60,000 and 65,000 Lebanese pounds.

Brax saw the proposal as a positive step towards a temporary solution to the fuel shortage crisis, and which many Lebanese see as a better option than removing fuel subsidies entirely. But others see it differently.

Economic expert Jean Tawile told Al-Monitor that this proposal “will not solve the fuel shortage crisis as long as smuggling continues and the state is unable to control the distribution of fuel and limit it to the market. local. According to Aurore Feghali, general manager of petroleum installations, 30 to 35% of fuel imports are smuggled into Syria, which explains the shortage of the Lebanese market. Fuel imports increased 10% in 2021 compared to the same period in 2019, according to the central bank governor, and we did not have a fuel crisis at that time. “

Tawile said, “The longer it takes to fix the problem, the higher the cost will be. Thus, the Central Bank will use the remaining required reserves. “

Tawile added: “To emerge from the crisis, we must stop the bad subsidy policy and support families in need with the help of the international community by providing them with ration cards so that they can buy their food needs. base, including fuel. This would put an end to smuggling as fuel prices in Lebanon will rise and prices will be equal in Syria. Therefore, they will not be smuggled or stored.

So far, there are no clear prospects for resolving the crisis, and cars will likely continue to line up at gas stations for some time, Tawile said.

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