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Petrol shortages trigger tension in Egypt
Wait until the grain shortage hits...
Petrol shortages and rumours of price hikes created havoc in the Egyptian capital for the third straight day Tuesday, as motorists rushed to fill up their tanks despite official assurances.

The oil ministry said on Monday authorities were pumping 21.5 million litres of petrol daily, with nine million litres allocated for the Cairo governorate alone, denying any plans to raise the cost of petrol, which is subsidized. But these assurances failed to calm motorists.

Authorities are blaming speculators and smugglers for the crisis. "What we are witnessing is an artificial crisis caused by rumours by some people who have an interest in making profit," said Planning and International Cooperation Minister Fayza Abul Naga.

Newspapers have linked the crisis to smugglers who reportedly buy up the subsidised petrol to sell abroad at higher prices.

Petrol in Egypt is sold at almost half the market value.
If that's the case, how is there any profit for 'smugglers' and 'speculators'? Oh right, the subsidies distort the market, creating shortages, which leads to speculation and smuggling, which leads to crackdowns, which leads to another revolution. If your citizens were adults you could bring the price up to market levels and avoid all that. But since your citizens are adult babies you'll get your revolution anyway. Enjoy the tiger ride...
The crisis has been exacerbated by allegations that the Egyptian government will lift subsidies on petrol as part of negotiations with the International Monetary Fund to shore up the economy after last year's unrest. Officials have denied these claims.
"No, no, certainly not! Please don't kill us!"
"The government has no intention to raise the price of petrol," the oil ministry said in a statement, adding that it was pumping 33 percent more than usual onto the market to satisfy needs.
"We like our heads attached to our necks! We'll even cut the price of petrol! You'll see!"
"We are currently pumping 21.5 million litres of petrol daily across the country to meet the needs of the local market," with nine million litres going to Cairo, oil ministry under-secretary Mahmud Nazim told reporters on Monday. Nazim said the rumours were "unfounded," adding that Egypt was not facing any shortages.

"The majority of Egypt's gasoline needs are produced by local refineries. Imports are estimated at not more than 10 percent, and all gasoline production units are working at full capacity," he told reporters.

On Monday Egyptian Prime Minister Kamal al-Ganzuri held talks with a delegation from the International Monetary Fund on the possibility of obtaining a 3.2 billion dollar (2.5 billion euros) loan to revive the economy.

"We discussed obtaining a loan from the IMF worth 3.2 billion dollars to help the government implement its programme to cut the budget deficit and the balance of payments," Abul Naga told reporters after the meeting. Abul Naga insisted that the IMF has not imposed any conditions on Egypt in exchange for providing it with financial aid, including urging Cairo to raise the price of fuel.

Scrapping petrol subsidies could ease Egypt's budget deficit which the government says stands at 144 billion Egyptian pounds (around 24 billion dollars). But financial analysts believe that the deficit for the current fiscal year -- from July 1 to end of June -- will be much larger. The large fiscal deficit, a fall in receipts from the vital tourism industry and an investment climate badly affected by instability and violence all contributed to the slump.
Wait until the government can't subsidize the grain costs and have to go back to the IMF. Or to Uncle Sugar.

Posted by: Steve White 2012-01-18
http://www.rantburg.com/poparticle.php?ID=337352