An Island on Pause: Cubans Facing the Fuel Shortage

By Amado Viera

HAVANA TIMES – When, on March 1, 2024, the Cuban government ordered a portion of the country’s gas stations to begin operating in US dollars, Yasmani assumed that little or nothing would change in his work as the driver of a privately owned passenger truck.

After all, he had been buying most of the diesel his vehicle consumed on the informal market for at least two years, given the impossibility of legally acquiring all he needed. If the authorities guaranteed fuel supplies at the new dollar-only gas stations — and to the extent possible, at those still selling in the national currency — the decision might even be seen as positive, and fuel prices didn’t have to “skyrocket,” he reasoned.

Over the following year, events would show him just how wrong he was.

“What actually happened was that diesel in pesos disappeared, the fuel sold in dollars was never consistently available, and the “clandestine gas stations” nearly doubled in price for diesel. We’ve all lost out — truck drivers, because we must invest more just to keep driving, and the public, because of the rise in fares and cargo prices,” he lamented.

“No Quantity Limit”

Yasmani and his father-in-law lease the truck from a former neighbor who emigrated to the United States. These types of vehicles are common in Cuba. Typically, they’re 1950s American trucks with their rear beds modified to install seats and a roof. Depending on comfort level, they can cover short trips, interprovincial routes, or even travel nationwide. Yasmani’s truck covers the 110 kilometers daily between the cities of Camagüey and Ciego de Ávila in center of the country.

“It’s 95 liters of diesel for each round trip. If I could buy it at the government price in pesos (132 pesos per liter), it would be 11,880 pesos. But that’s just wishful thinking. The only real options are buying in dollars or on the street,” he said.

The network of dollar-based gas stations sells diesel at $1.10 (396 pesos per liter, based on the April 4 exchange rate); meanwhile, on the informal market, the price ranges between 340 and 360 pesos per liter.

A year ago, when the first 28 dollar-only service stations opened, informal vendors usually sold diesel for no more than 200 pesos. The price could be even lower during times of greater fuel availability to government entities — such as during the sugarcane harvest season.

Traditionally, state-employed drivers have sold off part of the fuel they’re allocated to pay for vehicle maintenance or supplement their low salaries. Some of it is also “diverted” by managers of these entities, sometimes in large amounts. Last October, the company Tabacuba — one of the country’s most important, given its control of Cuba’s top export product, tobacco — announced it would begin delivering fuel directly to farmers after discovering that half the diesel intended for them never reached its destination.

Several gas station employees interviewed for this article agreed, however, that such “diversions” are not the only source of supply for the informal market. Another major source is the fuel officially sold in Cuban pesos.

“It works like a kind of ‘transfer’: the diesel that’s supposed to sell for 132 pesos per liter is hoarded by some people — including gas station workers — and then you find it for sale on the social networks, far above that price. It’s a business that hasn’t been stamped out, not even with digital apps or by organizing queues with inspectors,” one respondent explained.

Although fuel smuggling continues to be heavily prosecuted by authorities, platforms like Facebook are full of groups where gasoline and diesel are openly offered — sometimes “with no quantity limit.”

That’s something Yasmani has been told several times. “A while back, one of my regular sellers even told me he could give me the number of his ‘counterpart’ — that’s what he called him — in Havana, for a trip I had planned there. ‘With me or with him, you can buy as much as you want, even a full tanker truck,’ he said. I doubt he was bluffing. When I’ve gone to refill at his estate [a suburban farm], I’ve run into everything from large semis picking up containers at the Mariel port to rental cars from the tourism sector. Who knows how he gets his hands on that much fuel — and more importantly, how he manages to avoid problems with the police!”

Electricity or the Economy

On the night of April 4, the Ministry of Energy and Mines rushed to deny widespread rumors that the national electric grid was on the verge of another collapse. Had it happened, it would have been the sixth total blackout the island suffered in the past year.

Fears of a system crash weren’t unfounded. As on previous occasions when the country was plunged into darkness, in recent days the State Electric Company has been unable to start up most of its “distributed generation” plants due to a lack of diesel. This network of small-capacity plants, spread throughout the provinces, is activated during peak demand hours. On paper, it’s supposed to supply one-third of the national energy output. In practice, its contribution often makes the difference between long blackouts and shorter ones.

When the power generation deficit becomes too large, the system becomes vulnerable and can collapse, officials have explained.

To prevent such a scenario, the government has spent several years diverting large amounts of diesel to power plants. According to the latest official figures from 2023, Cuba imported 73% more diesel for energy production that year. The power plants that use it consumed around 40% of all diesel available in the country (pre-pandemic, this figure averaged around 20%).

“The detouring of diesel from productive activity to electricity generation obviously affects the economy. It’s a tough decision, which adds to the shutdown orders we often have to issue to industries and transportation in order to protect residential electric service,” acknowledged then Minister of Economy, Alejandro Gil, in mid-2023. But he had no solution to the problem.

Nor does there seem to be one nearly two years later, with all types of fuel now significantly more expensive and long lines at gas stations — even those selling in dollars — still the norm.

Read more from Cuba here on Havana Times.