Demands of industrial power generators and heavy transport companies are squeezing diesel supplies

Diesel supplies are not meeting demand, the Chamber of Petroleum Distributors said Tuesday, forcing gas stations and supply centers to ration sales. Chamber President Ivo Rosero said shortages are most extreme in the Guayaquil area where industry is competing with trucking companies and motorists for diesel.

Diesel fuel distributors are putting quotas on deliveries as demand outstrips supplies.

“Because of the new demand by large companies to operate their generators with diesel, there is a squeeze on supply and the shipments arriving in port are not sufficient to cover the need,” Rosero said. “We are establishing quotas for all customers and are tell Petroecuador to increase imports.”

Because of limited refining capacity, the country imports more than 80% of its diesel, according to Petroecuador.

In a Friday meeting, business organizations complained to the government about the shortage, although Energy Minister officials insisted there was no shortage. A day later, however, it acknowledged “a distribution problem” and ordered Petroecuador to increase purchases.

Some businesses are blaming the government for poor planning when it disconnected the largest electric customers from the national power grid. “They are asking us to provide our own power for three or four days a week but they don’t provide the diesel to run our generators,’ says José Antonio Camposano, President of the National Chamber of Aquaculture. “Our shrimp and fish farms are suffering loses because we are unable to operate our pumps and refrigeration equipment.”

Camposano claims that businesses are not only competing with transport companies for diesel but with the government itself. “They are taking the fuel off the top as it arrives in port and we are getting what is left, and sometimes we have to wait for hours or even days for reduced deliveries.”

Demand for diesel is surging, says energy consultant Nelson Baldeón. “It has increased 20% or 25% from a year ago due to the electricity crisis and Petroecuador is having trouble finding supplies. If the demand continues to rise, we could face severe shortages across all sectors of consumers.”

Baldeón says the supply chain is being disrupted by the war in Iran as well as by the conflict between Ukraine and Russia and he worries that demands from El Niño will put more pressure on the market. “The situation will get worse before it gets better,” he predicts.