In Lebanon, the price of gasoline is now out of reach

Beirut, Lebanon – Talal leans on a car at a gas station off Beirut’s bustling Hamra Street. It is usually one of the busiest in the area. During the summer, when Lebanon was beset by gasoline shortages, hoarding and smuggling, eager drivers lined up for blocks, waiting for hours to partially fill their gasoline tanks.

Now, there is a lot of gasoline to spare. The problem is that practically no one can afford it.

“We used to recharge about 200 cars every day, but today we are not recharging more than 30 or 40 cars,” Talal told Al Jazeera. “They are spending three-quarters of their salary just on fuel to get to and from work.”

Gasoline prices have risen at an alarming rate in recent weeks. Refilling a full tank for a standard car costs more than the country’s national minimum wage.

Talal even stopped riding his motorcycle to save gas.

Others, however, are taking their complaints to the streets.

Public transportation drivers protested and blocked roads for the past two weeks, demanding higher wages and subsidized gasoline and auto parts. One of Lebanon’s public transport unions threatened to close the country’s main roads in a so-called “day of rage” this week, but the union boss called it off after meeting with Prime Minister Najib Mikati, who promised to improve conditions. labor.

Until then, however, gasoline prices could rise further if the price of crude rises, said George Brax, a spokesman for the Gas Station Owners Union. But like many countries affected by the global energy crisis, Lebanon has domestic policies that are making the situation worse.

“And now that fuel subsidies are removed, when the value of the dollar goes up, so will gasoline prices,” Brax told Al Jazeera.

Until recently, Lebanon maintained expensive general subsidies on fuel, wheat, and drugs that cost about $ 7 billion a year. Fuel subsidies accounted for about half of that outlay.

But the state simply could not afford to keep prices low for all Lebanese consumers, thanks to a fierce economic crisis that has destroyed the country’s foreign exchange reserves.

In June, the Lebanese government began phasing out gasoline subsidies. To cushion the blow, he promised to implement programs to help the neediest families. But those financial lifesavers have yet to materialize.

Now consumers looking to fill their tanks are at the mercy of market forces, including world oil prices and a local currency that has lost about 90 percent of its value against the US dollar since 2019.

During the summer, drivers in Lebanon queued for blocks as the country was beset by gasoline shortages, hoarding and smuggling. [File: Mohamed Azakir/Reuters]

Unsurprisingly, Brax says gas stations have witnessed a 30 percent decline in consumption since August.

“We hope that decline will continue.”

Sami Zoughaib, an economist and researcher with local think tank The Policy Initiative, says the current pain at the pumps has been a long time coming.

“Them [politicians] fought tooth and nail to delay [lifting subsidies]ā€¯Zoughaib told Al Jazeera, adding that the government did not act to confront smuggling and hoarding of subsidized goods from families. “And here we are, after spending billions of dollars in subsidies for the fuel cartel.”

Political fights and blame swapping

For more than a year, Lebanon’s political leaders have vowed to replace costly general subsidies with ration cards that would cost the state $ 556 million annually, a fraction of the withdrawn subsidy program. It also aimed to distribute valuable state funds more intelligently by allocating them to just half a million of the most vulnerable households in the country.

To further ease the pain, in January, Lebanon and the World Bank signed an agreement for a $ 246 million loan to boost an existing poverty assistance program aimed at supporting some 200,000 families in need.

But none of those plans have been implemented, thanks in large part to political paralysis.

Last March, the World Bank loan was in jeopardy after Lebanese officials made amendments to the originally agreed plan. After further negotiations, Parliament was supposed to approve the plan on Thursday, but political disputes forced the session to end early.

Meanwhile, Parliament passed a law to approve the ration cards in June. But one crucial element, namely the funding of the launch of the program, was left to the government to figure it out.

On September 9, the day before Prime Minister Mikati formed his government, Acting Economy Minister Raoul Nehme and Social Affairs Minister Ramzi Musharrafieh announced that registration for ration cards would begin the following week. , and the first disbursements would begin in October.

But two months later, funding has not been secured, ministerial sources told Al Jazeera.

Senior MP Farid Boustany told Al Jazeera that Parliament will soon get funding through a bill and that part of the delays was due to new Mikati’s ministers wanting to review the programs.

However, it is not yet clear how Lebanon will secure the resources to finance the ration card program. Successive governments have failed to produce a credible financial reform plan necessary to unlock billions of dollars in aid promised by donors.

Alternatively, the country could take advantage of its recently received allocation of approximately $ 680 million in special drawing rights from the International Monetary Fund.

The World Food Program and other humanitarian agencies have told Al Jazeera that they have struggled to keep up with the growing demand for food, fuel and rent money. [File: Mohamed Azakir/Reuters]

Meanwhile, ongoing delays and political disputes mean that millions of Lebanese continue to struggle to meet their basic needs without any viable social protection. About three-quarters of the population now live in poverty, according to the United Nations. The World Food Program and other humanitarian agencies have told Al Jazeera that they have struggled to keep up with the growing demand for food, fuel and rent money.

Zoughaib of the Political Initiative, as well as activists, fear that the ration cards and other planned social safety nets will be held hostage to the political maneuvers of the country’s various factions ahead of the parliamentary elections scheduled for next spring.

“The increase in precariousness almost seems intentional, and in my opinion, I’m sure it is,” Zoughaib said. “They want people to come to the brink of elections so they can stay in control through cheap patronage and donor-funded cash assistance programs.”

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