Fuel prices reach all-time highs in Morocco

CASABLANCA - The summer holidays in Morocco are expected to be a lot more expensive than last year for Moroccan motorists who are witnessing an unprecedented hike in fuel prices that have been driven by the impact of the war in Ukraine.

The prices of unleaded gasoline reached an all-time-high of Dh17 ($1.7) per litre while the heavily used diesel is just under Dh15 ($1.5) a litre, an increase of 0.6 dirhams from last week’s prices.

Russia's invasion of Ukraine has triggered sharp rises in fuel prices, compounding global economic woes, especially for developing economies that have been struggling to recover from the COVID-19 pandemic.

Morocco’s economy minister Nadia Fatah Alaoui on June 6 ruled out the government’s subsidy of fuel prices.

“We don't have the budget to subsidize fuel prices. But let's not mortgage the future,” Alaoui told parliament.

“The rise in fuel prices … is a direct consequence of the war in Ukraine, which had a direct impact on Morocco and on the rise in the prices of several raw materials, including fuel and wheat,” she said.

“The government is called upon today to manage this crisis even though it has no visibility on international price fluctuations or on the duration of this crisis,” she added.

But experts are calling on the government to cut fuel duty to consumers who are already struggling to cope with soaring food prices.

The International Monetary Fund said Tuesday in a blog that policymakers in governments should allow high global prices to pass through to the domestic economy while protecting vulnerable households affected by the increases.

Alaoui said the problem is already the ability of stocking up on fuel in addition to the high cost.

“The government is mobilized with its partners to supply the national market with fuel and cereals without any problem,” she said.

Retailers base their prices on the wholesale cost of petrol and diesel. They change pump prices on a two-week basis to reflect any changes in wholesale prices due to the time it takes for fuel to reach forecourts. However, retailers are now changing pump prices on a weekly basis.

Scores of Moroccans on social media are deploring the government’s inaction to help stem fuel prices that have had a serious impact on their lives.

“An intervention must be made to reduce this real epidemic of national economic corruption,” wrote Kawtar Guiz on “Save Casablanca” group on Facebook.

Nadia, a civil servant, chose to use her car less because the “unbearable” diesel price is eating up her monthly budget.

“I don’t know if I could travel this summer if diesel prices keep going up while in the same time we are seeing a spike in daily coronavirus cases which will make the use of public transport riskier,” said Nadia.

Goldman Sachs strategists predicted last week that oil prices will rise to $140 a barrel this summer as a drop in Russia’s production and a gradual recovery in Chinese demand will add more pressure on already low supplies.

The bank said that summer retail gas prices are going to need to spike to levels normally associated with $160 oil in order to curtail demand.

"A large spike in prices remains quite possible this summer," Goldman Sachs strategists wrote in a report to clients.