Despair and brawls at Lebanon’s gas pumps as its crisis deepens

Lin Noueihed May 12, 2021

(Bloomberg) — Rising global oil prices are translating into shortages at the pump in cash-strapped Lebanon, with motorists lining up for hours to fill their tanks in the latest blow to living standards in the Middle Eastern nation.

On Tuesday, dozens of cars could be seen outside gas stations across Beirut by 8:30 a.m. The rush means storage vaults regularly run dry early, forcing service stations to ration supplies and customers to hunt the city for fuel.

Fadi Abou Chakra, who represents Lebanon’s fuel distributors, blamed the latest panic on rumors that government support for fuel purchases would end but said new gasoline deliveries were expected to arrive soon and provide respite. Lebanon’s central bank supplies dollars to importers of petroleum, wheat and medicines at a preferential exchange rate, effectively subsidizing them.

Since Lebanon’s economic crisis erupted in 2019, politicians have flirted with the idea of reducing subsidies and replacing them with cash transfers to the poorest. But the proposal remains stalled, as does a wider reform plan needed to unlock billions of dollars in foreign aid after the government defaulted last year on $30 billion of international debt.

Lebanon’s central bank allocates $250 million each month for gasoline, diesel and liquefied petroleum, but that doesn’t stretch as far as it did now that oil prices are rising, said Maroun Chammas, vice president of Medco, one of Lebanon’s biggest importers of refined petroleum products, with a nationwide network of 200 service stations.

“You have the same amount of money but less volume so there will naturally be a shortage,” he said. “When the central bank reaches that limit, it won’t pre-authorize additional tankers.”

Crude oil prices averaged $43 a barrel in 2020, when lockdowns to combat the Covid-19 pandemic hit demand for energy. They’ve been rising since, with benchmark Brent for July delivery trading just shy of $68 a barrel on Tuesday.

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