Rising fuel prices in Morocco could drive up the price of diesel to 1.47 euros (15.5 dirhams), while gasoline could reach 1.71 euros (18 dirhams). These maximums are provided according to the calculations of the experts of the National Federation of Owners, Traders and Managers of Service Stations of Morocco (FNPCGS).
The international conflict between Russia and Ukraine is not unrelated to the Moroccan economy, it is even one of its main accelerators. Since the Russian blockades, energy resources have become increasingly scarce, which, combined with sustained demandcaused a price spike.
The Moroccan government has repeatedly refused to support its citizens with various measures that could stimulate lower fuel prices. Nadia Fettah, Minister of Economy and Finance, apologized to Parliament on June 6, arguing that “We don’t have the budget to subsidize fuel prices… Let’s not mortgage the future”.
She also recognized that the government is called upon to manage this situation, but explained that the impossibility of knowing the possible future fluctuations of the pricesas well as the duration of the international crisis, make this task extremely difficult.
Despite Morocco’s high consumption of hydrocarbons, around 12 million tonnes per year, they are subject to multiple taxes. The TIC (domestic consumption tax) and the VAT (value added tax) are important taxes on the price of fuel. But for now, the government is not planning to reduce or suspend them in order to reduce the cost of fuel.
One of the measures envisaged by Morocco is to relaunch its “La Samir” refinery as soon as possible.. This would increase fuel storage capacity, which would help stabilize prices as much as possible.
Another formula suggested by some experts is to encourage service stations to reduce their profit margins, which would significantly reduce consumer bills. But in reality, it is very unlikely that the government will take action in this directionbecause the hydrocarbons sector has been liberalized in Morocco since 2015.
One of the sectors most affected by the rise in fuel prices is that of taxis, which led the national union of taxi drivers to threaten to strike on June 29 in front of the wilaya of Grand Casablanca. They believe that the subsidies allocated by the government to their sector are insufficient to cover the cost of fuel.
But this difficult situation is unlikely to be resolved, at least in the short term. Investment bank Goldman Sachs has predicted that the barrel of Brent could reach $140 by summeragainst 120 dollars currently.
“Western importers have announced import bans on Russian oil”explains Goldman, which the bank says will “result in significant and imperfect movement of barrels due to contractual and transportation constraints.”
One of the solutions suggested by the report published by the bank would be customs duties, which would amount to heavily taxing Russian exports, thus reducing the income of the country governed by Putinbut allowing a standardization of commercial flows.
The Organization of the Petroleum Exporting Countries (OPEC+) also took action, pledging to increase daily barrel production from 42.56 million barrels per day in July to 43.2 million barrels per day. Despite this increase in production, it remains insufficient to cover the deficit caused by the Russian oil embargo.
This embargo concerns oil transported by ship, which represented two-thirds of European imports of Russian crude, a figure which rose to 90% at the end of the year. This increase after Russian invasion was spread over the rest of OPEC membersbut some of them have not been able to increase the production rate of their infrastructures at the same time as the demand has increased.
All this means that the price of oil continues to soar and, even worse, it has not yet peaked.. Moroccans are therefore looking for ways to reduce their fuel bill as much as possible, despite the government’s reluctance to reduce fuel taxes.