Peak export land...
Argentina Cuts Off Fuel Exports Amid Shortage Reports - Telam
January 07, 2008: 03:10 PM EST
BUENOS AIRES -(Dow Jones)- The Argentine government cut off fuels exports and called for a pump price rollback Monday amid reports of fuel shortages, government news agency Telam reported, citing unidentified government sources.
The government officials said the export freeze, which follows a sharp increase in export taxes in November, was authorized under a 1974 supply law that requires companies to meet internal demand, Telam reported. The export freeze will remain in effect until supplies at service stations normalize and prices fall back, Telam said.
In addition to cutting off fuel exports, government planners also have called for retailers to drop pump prices back to levels seen in October of last year. Argentine pump prices are among the lowest in the region due to government pressure that began under President Nestor Kirchner, whose four-year term concluded last month. He was replaced by his wife, Cristina Fernandez, and some analysts had speculated that she would allow prices to rise some as the nation faces the prospect of becoming a net oil importer by the end of the decade.
Four companies account for about 95% of all refining and fuel sales in Argentina: Repsol-YPF SA (REP), Petroleo Brasileiro SA (PBR), or Petrobras, Royal Dutch Shell PLC (RDSA) and ExxonMobil Corp (XOM).
Local pump prices had been more or less frozen since March 2005, when Kirchner called for a boycott of stations operated by Shell after the company raised pump prices. The price of premium gasoline had floated around 1.99 pesos ($0.64) per liter until April of last year, when it began to creep higher.
Argentina faces chronic shortages of diesel, especially during key harvest and planting periods, although there is still a surplus of gasoline, which had allowed refiners a opportunity for profit. That margin was pinched in November, however, when the government raised the tax on gasoline from 5% to around 35%.
-By Drew Benson, Dow Jones Newswires; 54-11-4311-3127; andrew.benson@ dowjones.com
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