War in Libya reaches Gaza gas pumps

Some say smugglers direct fuel to more profitable buyers in war-torn country; others blame Egypt for reducing production of cheap gasoline.

Gazans buy gasoline in Rafah 311 (R) (photo credit: Nasser Nuri / Reuters)
Gazans buy gasoline in Rafah 311 (R)
(photo credit: Nasser Nuri / Reuters)
Political turmoil in Libya has created problems in the energy market in the Gaza Strip, a local businessman claims, because cheap gasoline smuggled in from Egypt is now being diverted to markets willing to pay higher prices, he said.
Mahmoud Al-Khazandar, vice-chairman of Gaza’s Oil and Gas Companies Association, said both the quantity and the quality of the cheapest 80-octane fuel has sharply deteriorated in the past three weeks. Smugglers dilute and tamper with the already inferior gasoline entering Gaza through smuggling tunnels in the Sinai Peninsula, he says.
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"Everyday the fuel comes in a different color – sometimes brown, sometimes yellow, which means that there is more tampering going on," Khazandar told The Media Line.
Gazans pay NIS 2.18 (63 cents) for a liter of 80-octane gasoline and NIS 3.2 (92 cents) for higher quality 92 octane gasoline carried through tunnels from Egypt Israeli gasoline, which enters Gaza through the Kerem Shalom border crossing, is better quality, but at a pump price of NIS 7/liter, only the wealthiest Gazans fill up with it.
Khazandar said Gaza residents require 200,000 liters of petrol daily, but quantities have diminished to less than 50,000. The missing oil is going to places where smugglers can make a bigger profit.
Since the start of the civil war in Libya, Egypt’s neighbor to the west, oil production has plummeted. The International Energy Agency (IAE) estimates that the crude production dropped to only 200,000 from 1.5-1.6 million barrels a day before fighting broke out in February. The IAE warned that old production levels were unlikely to resume before 2015.
Doudy, owner of the Tarazi Gasoline Company in Gaza, acknowledged the gasoline shortage in his stations, but said it was caused by internal Egyptian decisions rather than international turmoil.
"There is a shortage of the same gasoline type in Egypt as well," Doudy told The Media Line. "It is very low quality, and the Egyptians intend to stop producing it and move to a better standard."
Doudy said the low-grade 80-octane gasoline wasn’t used in Egypt's main cities, but only by the poor in the outlying Sinai Peninsula and Upper Egypt. He said there were also rumors that the Egyptian government intended to cut its power subsidies, which accounted for its low price in the local market.
Doudy added that out of the total retail price of 63 cents a liter, gasoline smugglers receive 23 cents and the Hamas government taxes it 29 cents, leaving only 11 cents for the gas station owners.
But Ali Abu-Shahla, a Gaza businessman, said the publication of a gas shortage was only a ploy by Gaza traders to increase their sales. He accused some people of circulating the shortage story to justify an imminent price increase or in order to get rid of high quantities of gasoline reserves in the stations.
"I filled up my tank yesterday and noticed no lines at the stations or higher prices," Abu-Shahla told The Media Line.
Khizandar said there is no gas crisis in the city simply because Gazans are willing to pay a bit more for better quality gas.
Bilal Rantisi, an official at Gaza's Petrol Agency, said the Hamas government dealt only with legal gasoline entering from Israel. He added that the United Nations and other international agencies were the main consumers of Israeli gasoline.
But the Hamas government regulates and taxes the illegal import of gasoline in a semi-official manner. Last September the Hamas Finance Ministry doubled its taxation on gasoline entering Gaza through the tunnels through the tunnels, issuing permits to private companies who send tankers to the tunnels.
Doudy, the gas station owner, said he believes the shortage of the low-grade gas was actually a blessing in disguise.
"Forcing Gazans to buy better gas will be better for the climate, for pollution and for the cars," he said. "People in Gaza demand the cheapest gas, but there's no justification for this. Gaza is full of money now that the siege is over."
Egypt has partially opened the Rafah border crossing with Gaza recently, but it only allows the passage of people, not commodities. In an interview with the Ma'an News Agency, Khazandar called on the Egyptian government to officially allow the export of gas to Gaza, making the illicit and dangerous tunnel trading obsolete.