Tuesday, 7 June 2011

UAE Petrol Crisis. The Mystery Deepens

I retain my sense of wide-eyed amazement that this situation could be possible: a fuel shortage in an oil producing country. Today's newspapers are full of the story and a remarkable pattern is emerging of silence and mind-boggling mendacity on the part of the distribution companies being hit by the shortages.

In fact, The National (James Bond's favourite Middle Eastern newspaper, dontcha know) leads with 'Empty filling stations and the great fuel mystery', gleefully reporting that retailers Enoc and Eppco (two brands of the same company, in fact) have cited pump upgrades to their 167 stations across the country as being the cause of their empty forecourts. The newspaper's reporters visited a number of the stations and confirm what you already possibly suspect: there is no sign of any work going on to upgrade anything in any way whatsoever. I have personally seen closed stations opening again once a tanker has visited, so there must obviously be some degree of indecision regarding which stations to upgrade.

Gulf News contents itself with unquestioningly repeating the statements made by Enoc/Eppco regarding upgradation to the petrol pumping network facility terminal equipment. By the way, you can just juggle up the words from the last sentence as you see fit because whichever way you place them, they mean the same thing. Emarat has maintained a dignified silence throughout.


Meanwhile Dubai Eye Radio's The Business Breakfast interviewed an 'expert' who spent his time on air speculating that this could be some sort of pipeline issue.

Inside The National, we see mention of the issue of subsidies, regulated prices and supply that many are speculating is actually the issue behind the shortages - at current government-set prices and with oil prices hovering around the $100 mark, it's hard to retailers to do anything other than make massive losses - The National quotes Enoc's CEO as saying that selling fuel at the regulated price cost it Dhs1.5 billion last year - despite two very unpopular price rises taking place over the year. Adnoc, of course, refines its own fuel and so has been unaffected by the need to upgrade its pumps.

This remains speculation, however, as the retailers who have run out of fuel (sorry, who are upgrading their pumping infrastructure) have for weeks now either maintained a stoical silence or thrown out chaff in the shape of vague and arguably mendacious statements. That policy, so popular here but increasingly unrealistic in the age of online and social media resources, has led to a risible situation - everybody knows that something is very, very wrong but nobody is allowed to talk about it officially. It does rather remind me of the burrow in Watership Down where the society of well-fed, sleek rabbits who are being snared by the farmer who's feeding them are prohibited from using the words death or snare.

7 comments:

Mita said...

I think they're prepping us for another price hike.

Seabee said...

I really don't understand the utter stupidity of organisations here in not doing the simple thing - tell the truth.

Jayne said...

Gawd forbid they must actually tell the truth!

Anonymous said...

How can countries like Bahrain and Oman which are much less significant oil exporters manage to keep their prices lower? And its not like they are very rich countries either?

Anonymous said...

I suspect that in Bahrain and Oman the fuel retailers buy discounted fuel from the refiners, who in turn buy discounted crude from the national oil company, thus pushing the subsidy back up to the national oil company, which can afford to pay for it because it sells the vast majority of its oil at $100/bbl on international markets. Clearly, this practice results in a huge amount of "foregone revenue" for the national oil company because it could have sold all that crude at world prices, instead of selling some of it at a discount. This is effectively the support that the government has decided to give to Mohammed Public when he fills his car.

In Dubai, I think the retailers don't get such a good discount on fuel from the refiner (because Dubai is not oil-rich). Historically, they have tried to make up the difference by selling other goods and services at the fuel station at high margins (sweets, car washes, McDonalds franchises). But at $100/bbl crude price, that just isn't enough.

Stained said...

Yesterday afternoon I ended up at an Emarat petrol pump with no special fuel ('we have only super' the attendant said). I then drove down to the nearby 'run down' eppco station and they had special with only one visible shortage i.e. customers. Maybe it's over two decades old pumps didn't need an upgrade...

VMB said...

I think they are rationing supplies and possibly storing it elsewhere. There are two reasons why you would want to ration supplies:

1. There is an impending shortage / crisis that you see in the near future. Possibly a war in the region.

2. You are hell bent on making sure you blackmarket the produce until the federal government agrees to a price rise.

Whatdya think ?