Fuel: Gas prices at the pump may explode
The news is far from being good. Gas prices at the pump will increase again. Liberalized for more than 5 years, the price of gasoline has crossed the bar of 12 Dirhams (MAD) and diesel the bar of 11 Dirhams in recent weeks, and those levels could be exceeded in the coming days.
The evolution of oil prices and of the dollar will result in a price of diesel around 15 Dirhams per liter and 17 Dirhams for gasoline. On Wednesday morning, crude oil prices resumed their surge, following concerns over the Ukrainian crisis. By 07:23 GMT, Brent crude futures for May delivery were up 3.40%, namely $4.08, reaching $127.27 a barrel. US West Texas Intermediate (WTI) crude futures for April delivery were also up 2.80 percent, namely $3.3, reaching $122.7 a barrel.
If the surge continues, both gasoline and diesel fuel will become unaffordable.
For now, the government prefers to work directly with the affected professionals, as is the case today with the transporters. But is this enough? What mechanisms will it roll out since the rise in the price of black gold does not have a glass ceiling? It must also be said that the subsidy of petroleum products practiced for years was unsustainable for public finances. In fact, even the support for gas and flour will cost more than expected. If prices continue to rise, the amount of the butane gas subsidy provided for in the 2022 budget law will be greatly exceeded. For example, for a consumption of 2.6 million tons and a price of 10,000 MAD per ton, the bill will soar by several billion dirhams.
Today, unless the government reduces investments or widens the budget deficit or delays certain strategic projects such as the generalization of social protection, the government shall not have sufficient margins.
In addition to the high cost of diesel and gasoline, the other concern is related to strategic stocks, especially with the risks on availability and therefore on supply. On this issue, Morocco is lagging behind and the debate between operators and the government concerning who is responsible for the strategic stock is still at a standstill. The Government requires a stock of 60 days of sales, both in terms of product availability and capacity. In addition, each distribution company must hold a minimum of 15 days of tool stock. “Despite the effort made by the distribution companies, no operator is capable of achieving them at present. They have so far invested in the existing storage that is necessary to unload imports. The existing storage capacity is about 1 million cubic meters, an equivalent of 3 billion MAD invested”, said Mostafa Labrak to L’Economiste, CEO of Inergysium Consulting. In other words, the existing depots are not sufficient to meet the mandatory security stock and the current level rarely exceeds 30 days. The capacity needed to fill the gap would be about 2 million cubic meters and would require an investment of 10 billion MAD.
Khadija MASMOUDI
