Remember last April when the gas stations in Dubai and neighboring emirate, Sharjah, suddenly dried up? Drivers would pull into fuel stations only to be greeted by attendants with sheepish looks and no answers. Suddenly, in one of the world’s largest producers of crude, gasoline became scarce, at least in Dubai and the northern emirates.
The fuel shortages have continued to the point where the Sharjah Executive Council gave two of the Dubai-owned companies, Enoc and Eppco, a month to get their business in gear or face closure. Well, the deadline came and went this week and sure enough barriers were put up, stations are closed and workers are worried about their jobs.
When this first started, the official word for the shortages was that the stations were undergoing some sort of maintenance. No one really bought that. As the shortages continued and the frustration flared, the spokesman just stopped returning calls for comment, it seemed from the coverage in local newspapers.
Essentially, cash-strapped Dubai no longer wants to pay for below-market priced gas for the northern emirates. And the shortages were a sort of passive-aggressive way to get both Abu Dhabi’s attention (and subsequent help) and get out of supplying the money-losing fuel.
Emirates National Oil Co., a Dubai government-owned refiner and operator of service stations, closed filling points in neighboring Sharjah and restricted supplies to other northern emirates last week. … The emirate plans to cut ‘subsidies and transfers’ by 50 percent to 2.67 billion dirhams in 2011 from a year ago, according to a government forecast.
‘Below-market retail prices — without a way to make up the losses — is an unsustainable situation,’ Rachel Ziemba, a Middle East analyst at Roubini Global Economics LLC in London told Bloomberg News. ‘The Dubai government continues to be cash-strapped, and this is one of the reminders that just because its companies are restructuring, it doesn’t mean that Dubai Inc. is out of the woods yet.’
Only the federal government can approve a hike in the price of gas. Given all the Arab Spring action all around us, it’s not likely the U.A.E. will take away such a key subsidy at this time.
Beyond the economics or political calculation of subsidy or the randomness of the world’s fourth largest producer of oil suddenly having empty stations, what’s striking about this entire episode is either sheer genius or ineptness of the Dubai P.R. machine. Certainly, we’ve seen this passive-aggressive approach before.
Finally, this week, under questioning from a Gulf News reporter, a Enoc Group spokesperson said he couldn’t comment.
I cannot give a statement now, don’t ask me questions I cannot answer,’ he said. ‘I agree that we should be more transparent, I agree 150 per cent, but we have directives not to talk about this issue now.’
Pressed for answers, he made casual comments on the weather to change the subject.”
Pressed for answers, he resorted to chatting about the weather! Brilliant. Especially considering there’s only one way to describe the weather this time of year: Hell.
(OK, I’m sure he was just following his marching orders. The poke is more at his company, the entity that decides to do this and then not be prepared to respond to the inevitable media inquiries.) Still, his quote inspired a string of tweets from a former colleague of mine, Tom Gara. Hope you enjoy them as much as I did.