CAIRO, 19 February 2005 — Car drivers, farmers and factory owners all watched in dismay as the price of oil rose in Egypt a few days ago. While the government claims prices are now under control, consumers argue that oil is becoming less affordable to the masses.
International energy prices have been going through the roof recently. Crude prices have remained above $40 per barrel mainly due to worries over the ability of oil exporters to meet the global demand. The impact has already hit Egypt as the state spent 28 billion Egyptian pounds on energy subsidies last year. The government, therefore, raised the price of subsidized diesel fuel by 50 percent last year in order to rein in expenditure.
In another bid to ease subsidy costs, early this week the government announced it would replace the cheap octane 80 and octane 90 gasoline by the more expensive, lead-free octane 92 and octane 95 gasoline all over Egypt in two years. Defending the move, prime ministerial spokesman Magdi Radi said: “The new products comply with international and environmental production criteria and will help the government cut some of the expenses.”
In a few hours, car drivers were complaining that it was taking them hours to find a gas station willing to sell the octane 80 and octane 90 gasoline. A couple of days later they had to pay 1.50 pounds on the black market for a liter of octane 90 instead of the usual one pound. The official explanation was that a few gas stations have some over-demand problem. In less than a couple of days, hundreds of car drivers found themselves queuing outside empty gas stations. While a lucky minority of drivers managed to purchase a few liters of fuel for double prices on the black market, those who could not afford the increase could only watch from the sidelines as it had its effect. At some gas stations in Cairo owners reported scuffles outside their stations between people shocked to find that the price of fuel was being passed up the economic food chain.
The situation was worse in major villages in both upper Egypt and the Delta. “The government was basically to tell the people about the new products promising them to control prices, while it was actually withdrawing the cheaper subsidized benzene 80 and 90 from the market,” said Tareq Muhammad, an owner of a car in the Delta. “The officials knew perfectly well that the people would not have any other options but buying this indispensable product.”
The Cabinet said that the market will be monitored so that transportation costs would not jump. Taxicabs and microbus fares immediately jumped by as much as 50 percent in some places reportedly leading to a crackdown on price-jackers by the ministries of interior and local development. In some Delta governorates, meanwhile, taxi fares jumped 100 percent for long-distance trips and 50 percent for short ones. “You have now to pay what the taxi driver demands because if you do not you are not going to go anywhere,” said Kamal Amin, who takes taxi everyday to go to his school.
In Cairo, though, taxi and microbus drivers have been more reluctant to raise fares, fearing as-yet-unclear penalties.
Parliamentarian Khairi Qalg, who issued an urgent statement at the Parliament asking the government to return to its old scheme, told Arab News that gradually the gasoline price hikes would trickle down to commodities prices. “It is true that the new move would help the state budget but people would not be able to afford another price increase now,” he said. “The government has to remember that 90 percent of the market depends on the 80 and 90 octane,” he stressed.
Meanwhile, Medhat Youssef, deputy chairman for operations of the Egyptian General Petroleum Corporation said the positive effects of the recent move should not be ignored. “People would pay a few extra pounds but the new benzene will protect their engines and their environment,” he said. “You have an immense number of cars in Egypt whose owners are keen on keeping them in a good shape.”