Gasoline is cheaper than water. The company in Libya justifies this with social benefits

While the average price of gasoline around the world is $1.29, at Libyan gas stations, 95-octane gas costs only 0.15 dinars, or $0.028, in October. This means that fuel in this country, which is the world's third largest importer of gasoline smuggled from Russia, costs less than a bottle of water and is the cheapest in the world.

Although Libya has the largest oil reserves in Africa, estimated at 48 billion barrels, low prices at gas stations are the result of government subsidies. And because Libya does not refine its own oil, it imports almost every liter of gasoline the country needs for transportation, energy production and basic public services. It sources its supplies mainly from Greece and Cyprus, but it is also the largest buyer in Africa and the third largest buyer of petroleum products smuggled from Russia.

Last year's investigation by the American agency Bloomberg News showed that smuggling fuel to Libya, mainly Russian, is worth at least $5 billion. And these purchases – according to the S&P Global Commodity Insights platform – have increased sharply since February 2023, when the European Union imposed an embargo on Russian petroleum products.

This is Libyan state fuel imported legally and illegally the oil company practically gives it away at gas stations, justifying it as a social benefit. The fuel subsidy program began during the regime of Muammar Gaddafi in the late 1970s. And although Libyans do feel its benefits, its costs for the state are enormous. In 2022, it will cost Libya $12.8 billion, or almost half of its budget. Subsidies restrict investment in other areas of the economy, hampering long-term growth and putting a huge strain on public finances. (PAP)

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