Great. Fucking great. Because we haven’t had enough fun with fuel shortages this year.
Egypt is finding it increasingly difficult to import fuel as foreign banks and traders pull the plug on credit and charge high premiums due to concerns over its financial and political stability, trading and banking sources said.
Sporadic international loans have so far helped, and the country requested up to US$4.8 billion from theInternational Monetary Fund(IMF) on Wednesday, but without such ad-hoc interventions, Egypt could quickly end up like debt-stricken Greece, dependent on a narrow pool of traders charging richly for supplies.
That could put a dangerous strain on Egypt’s finances, which are already under pressure from high fuel subsidies it can ill afford to maintain but dare not cut in the precarious first months of new Islamist President Mohamed Morsy’s tenure.
This is why the free market does not always work. The individual firms that are withdrawing credit from Egypt are right to do so in following their self-interest, yes, but the result will be increased instability, harsher economic conditions, which will contribute to further instability, and so on and so forth. The usual cycle.
The whole idea of the invisible hand, the guiding logic of the free market, is basically that when everybody follows their self-interest, it still works out the best for the whole; that the whole system is guided in the optimal direction by the crowdsourcing of interest, so to speak. This is not the case in situations like this.
When I was down in Nubia, we spent hours one day just trying to figure a way to get from the village where we were to Aswan simply because almost none of the available vehicles actually had fuel. That was before Morsy got elected. In Luxor, I saw cars lined up for miles down the road from the benzine/gas station. You see similar things in Cairo when there are shortages. Not to mention that the power goes out regularly in most places.
The fuel supply system here does not have a lot of give in it. I wish I could see some numbers on what a sustained shortage would do to the average household, but that would mean having actual data, which never happens.