In Lebanon, petrol is now priced out of reach
Filling up the gasoline tank in a standard vehicle in Lebanon now costs more than the monthly minimum wage.
Beirut, Lebanon – Talal leans against a car at a petrol station off Beirut’s bustling Hamra Street. It’s usually one of the busiest in the area. Over the summer, when Lebanon was beset by gasoline shortages, hoarding, and smuggling, anxious drives would queue for blocks, waiting for hours to partially top up their petrol tanks.
Now, there is plenty of gasoline to spare. The problem is, practically no one can afford it.
“We used to top up around 200 cars every day, but today we’re topping up no more than 30 or 40 cars,” Talal told Al Jazeera. “They’re spending three-quarters of their salary just on fuel to go to and from work.”
Gasoline prices have climbed at an alarming rate in recent weeks. Refilling an entire tank for a standard car costs more than the country’s national minimum wage.
Talal even stopped driving his motorcycle to save on gasoline.
Others, though, are taking their grievances to the streets.
Public transportation drivers protested and blocked roads over the past couple of weeks, demanding higher wages and subsidised petrol and car parts. One of Lebanon’s public transportation unions threatened to shut down the country’s main highways in a so-called “day of rage” this week, but the union head cancelled it after meeting with Prime Minister Najib Mikati, who promised to improve working conditions.
Until then, however, gasoline prices could climb even higher if the price of crude goes up, said George Brax, spokesperson for the Gas Station Owners’ Syndicate. But like many countries in the grips of the global energy crunch, Lebanon has domestic policies that are making a bad situation even worse.
“And now with the subsidies lifted on fuel, when the value of the dollar increases, then so will gasoline prices,” Brax told Al Jazeera.
Until recently, Lebanon maintained expensive blanket subsidies on fuel, wheat, and medicines that cost about $7bn 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 festering economic crisis that has gutted the country’s foreign reserves.
In June the Lebanese government started to gradually lift subsidies on gasoline. To cushion the blow, it promised to roll out programmes to help the neediest families. But those financial lifelines have yet to materialise.
Now, consumers looking to fill up their tanks are at the mercy of market forces, including global oil prices and a local currency that has lost some 90 percent of its value against the United States dollar since 2019.
Unsurprisingly, Brax says that gas stations have witnessed a 30 percent decline in consumption since August.
“We expect that decline to continue.”
Sami Zoughaib, economist and researcher at local think-tank The Policy Initiative, says that the current pain at the pumps has been a long time coming.
“They [politicians] fought tooth and nail to delay [lifting subsidies],” Zoughaib told Al Jazeera, adding that the government did not act to take on the smuggling and hoarding of subsidised goods from families. “And here we are, after spending billions of dollars for the fuel cartel in subsidies.”
Political squabbling and trading blame
For over a year, Lebanon’s political leaders have promised to replace expensive, blanket subsidies with ration cards that would cost the state $556m annually – a fraction of the retired subsidies programme. It also aimed to distribute precious state funds more wisely by earmarking them for only half a million of the country’s most vulnerable households.
To further offset the pain, in January, Lebanon and the World Bank penned an agreement for a $246m loan to boost an existing targeted poverty assistance programme to support about 200,000 families in need.
But neither 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 more negotiations, Parliament was supposed to pass the plan on Thursday, but political disputes forced the session to end early.
Meanwhile, Parliament passed a law to approve ration cards back in June. But a crucial element – namely funding the programme’s launch – was left to the government to figure out.
On September 9, the day before PM Mikati formed his government, caretaker Economy Minister Raoul Nehme and Social Affairs Minister Ramzi Musharrafieh announced that registration for ration cards would start the following week, with the first disbursements starting 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 secure funding through a draft law and that part of the delays were due to Mikati’s new ministers wanting to revise the programmes.
It’s still unclear, though, how Lebanon will secure resources to fund the ration card programme. Successive governments have been unable to produce a credible financial reform blueprint needed to unlock billions of dollars in pledged donor aid.
Alternatively, the country could tap into its recently received allocation of roughly $680m in International Monetary Fund Special Drawing Rights.
Meanwhile, the ongoing delays and political squabbles mean that millions of Lebanese continue to struggle to secure basic necessities without any viable social protections. Some three-quarters of the population now lives in poverty, according to the United Nations. The World Food Programme and other humanitarian agencies have told Al Jazeera that they have struggled to keep up with skyrocketing demand for food, fuel, and money for rent.
The Policy Initiative’s Zoughaib, as well as activists, fear the ration cards and other planned social safety nets are being held hostage to political manoeuvering by the country’s various factions ahead of parliamentary elections scheduled for next spring.
“The increased precariousness almost seems intentional – and in my opinion, I am sure it is,” Zoughaib said. “They want people to get to the elections on the brink so they could maintain their chokehold through cheap clientelism and donor-funded cash assistance programmes.”