Fuels: due to agribusiness, Córdoba suffered less quarantine

More than 40 billion pesos was the turnover lost by Argentine service stations, as a consequence of the sharp drop in fuel consumption that occurred in April. The reason was the social, preventive and compulsory isolation provided by the national government to prevent the spread of the new coronavirus.

The data, according to economist Gastón Utrera, head of the consulting firm Economic Trends, arises from multiplying the price of diesel and gasoline by the fewer liters sold in retail outlets in the fourth month of the year, compared to February, before quarantine was imposed.

Utrera, together with the president of the Confederation of Entities for the Trade of Hydrocarbons and Related Industries of Argentina (Cecha), Pablo Bornoroni, presented a report on the impact of the Covid-19 pandemic in this sector.

“It has been an unprecedented fall due to its magnitude, something never seen in history,” said Bornoroni.

The numbers of the National Secretariat of Energy show that the amount of total liters sold, if the two types of diesel (grades two and three) and gasoline (super and Premium) are taken into account, was reduced by 47.4 per hundred last month.

Given this scenario, Cecha estimates that 64 percent of the stations are working below their “critical point” and 22 percent do not reach the “balance point”. In other words, 86 percent are operating at a loss or without profitability.

The biggest drop was in gasoline, with a drop of 67.5 percent, which is directly related to restrictions on the mobility of people.

In addition, there was a shift in demand for the cheapest fuel: while Premium naphtha consumption fell 73.6 percent, that of super gasoline fell 65.2 percent.

Diesel, meanwhile, saw its consumption drop 28 percent. This better scenario for diesel is due to the fact that the pandemic came at the height of the soybean and corn harvest, in addition to the fact that the food industries located in the interior of the country were exempt from isolation.

Proof of this is that sales of grade two diesel, which is used by trucks and agricultural machines, were only down 17.8 percent. On the other hand, those of grade three did suffer a considerable collapse of 52.1 percent.

Córdoba, better than the rest

Another of the points that Bornoroni and Utrera highlighted is that large urban centers are the biggest losers in this critical context, especially since it is where the demand for gasoline is most concentrated, as opposed to the diesel that is sold inland.

For example, in the Autonomous City of Buenos Aires the drop in gasoline sales reached 79.3 percent.

On the contrary, Córdoba is the province –considering the large jurisdictions– that suffered the least from the quarantine.

According to data compiled by Economic Trends, total fuel consumption fell 29.1 percent in Córdoba, a drop well below that of the national average.

In this province, the role of diesel was more key than in any other, with demand that fell by just 2.5 percent. The fall in gasoline, on the other hand, was in tune with the national decline: it was 68.5 percent.

“The explanation is the great concentration of activity linked to the agricultural sector and the food industry in the interior of Córdoba, where there are very large companies that sustained the levels of diesel consumption,” Utrera synthesized.

As a sample, there is one piece of data: the demand for grade two diesel in Córdoba not only did not drop, but grew 7.4 percent in April, in the mid-40s. And if the provincial capital is removed from the analysis, inland the stations dispatched 15.6 percent more liters of this fuel.

Critical Overview: Stations with no gain

86.3% It is the proportion of service stations that are working with operating losses or without reaching a minimum profitability.

Print edition

The original text of this article was published on 05/23/2020 in our printed edition.

Written by Argentina News

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