Premium gasoline headed to $4 a gallon; Russian sanctions hit banana and flower prices; Usury scam targeted in Gualaceo; Landslides wreak havoc
With international oil prices breaching the $120 per barrel mark over the weekend, Ecuador is expected to raise the price of high-octane gasoline to at least $4 a gallon next week. The price of regular gasoline and diesel will remain at $2.55 and $1.90, rates fixed in December by the government.
Gasoline distributors expect the price of premium to rise to $4.06 a gallon when the Energy Ministry sets the new rates on Saturday, March 12. “We have never seen this kind of increase before and there is no indication of when it will moderate. It all depends on the situation in Ukraine,” says Oswaldo Erazo, president of the Ecuador Association of Petroleum Distributors. “We expect a 38 cent per gallon hike next week, from the current $3.68.”
Erazo added that the increase is creating an oversupply of premium gasoline for distributors. “Because of the price rise, many drivers who previously used premium are switching to Eco Pais [regular] gasoline.”
On Saturday, the per barrel price of benchmark West Texas crude was $127 while North Sea Brent sold for $130.
Banana and flower prices plummet due to Russian sanctions
Ecuador banana and flower growers are selling their products at steep discounts, often at a loss, due to sanctions against Russia for the invasion of Ukraine. According to growers’ associations, markets in Russia and Ukraine are closed until hostilities end.
“The war is a tremendous blow to growers and we see no relief in sight,” says economist Walter Spurrier. “Even if the Russians and Ukrainians were able to buy, the distribution network is suspended. Air freight carriers, such as KLM and Latam, have ended their flights and sea shipments by Maersk and Hapag-Lloyd to Saint Petersburg and Odessa have stopped.”
Russia buys almost 25 percent of Ecuadorian bananas while Ukraine buys about three percent. For cut flowers, the Russian market accounts for about 20 percent of sales.
A spokesman for banana growers said his members are scrambling to find markets to products that are already cut and packaged. “We will sell at almost any price since it’s better than having it rot in the cartons,” he said.
Flower growers face the same problem, says Spurrier. “Like bananas, there is a limit to market demand no matter what the price.”
In addition to market disruptions, growers also worry that they will not be paid for shipments already delivered. “The Swift payment system, which processes international transfers, has been closed to Russian banks,” Spurrier said. “Maybe a work-around will be established but that’s doubtful.”
Flower growers say they are owed at least $40 million for Women’s Day deliveries made before the invasion.
Flooding and landslides block highways
Continuing rains in much of Ecuador are wreaking havoc on travel, closing key highways between Quito and the coast and from Cuenca to Loja. As of Sunday night, the highway between Riobamba and Cuenca was closed due to large mudslide in Alausi.
The route connecting Cuenca and Guayaquil, closed last week for 40 days to repair damage from earlier landslides, suffered new landslides over the weekend. “Due to rainy weather, we are suffering multiple road closures throughout the country, especially in the Sierra,” the Transportation Ministry said Sunday. “We have heavy equipment working on at least seven clearing projects today and work will be maintained Monday.”
Flooding around Quito and Riobamba was not only affecting highway travel but flooding homes and killing livestock as well.
Usury charges pending in Gualaceo
The Azuay Province Prosecutor’s Office is investigating a loan operation in Gualaceo that was offering investors a weekly 15 to 20 percent return. The operation, run by three women, was charging twice that amount to borrowers.
The investigation follows complaints that the women were attempting to claim real estate and personal property when borrowers failed to make payments.
A spokesman for prosecutors said that arrests were forthcoming. “It appears that the women borrowed money from a legal financial cooperative to make their first loans and then appealed to investors,” he said. “We have identified at least 20 people who were victims of the scheme and who have been threatened with seizure of property. We believe that there are more who are afraid to come forward.”
City to build new Yanuncay bridge on west side
The Municipality of Cuenca will build a new bridge across the Rio Yanuncay, west of Av. Las Americas. According to the city transportation office, the Isauro Rodríguez Bridge will be constructed west of the Misicata bridge, reducing traffic pressure on Av. Las Americas.
The city says the bridge will cost $1.47 million and require six months to build. The project will generate 500 jobs.