Rising gasoline prices threaten social stability and food security in Latin America

Rising fuel prices have already triggered protests in Argentina, Ecuador and Panama. Their neighbors may be particularly susceptible to rising gas prices because the region lacks alternative means of transport, such as rail and waterways, which are more common in Europe and North America, and consume less fuel.

“The price of fuel is the anchor for the entire economy: if fuel goes up, it has a direct impact on all kinds of prices,” says Sergio Guzmán, director of a Colombian risk analysis consultancy in Bogotá.

The problem is exacerbated by the fact that some sectors in the region require more fuel than ever before – ironically, to offset the effects of climate change.

Analysts say that in Ecuador, where bananas are a major agricultural export, water from banana plantations is pumped by diesel pumps.

According to Raúl Villacres of Pulso Bananero, a banana trading consultancy in Guayaquil, Ecuador’s banana production fell 7% from last year, due in part to higher diesel and gasoline prices.

A similar situation is affecting Colombia’s fishing industry, which enjoys some of the cheapest fuel prices in the world. However, when the Ministry of Energy and Mining published new regulated prices in early July, it sent shock waves across the country.

Twice a week, fisherman Jimmy Murillo leaves the port city of Buenaventura on the Pacific coast of Colombia. On average, he spends two or three days at sea before returning with his catch, but recently trips have become longer as fish stocks have dwindled and fishermen have moved farther from shore in search of better prey.

Ironically, climate change is one of the reasons for the decline in fish catches, and fishermen like Murillo have to use more fuel to mitigate its impact. One reason, Murillo told CNN, is that as rainfall patterns change and more heavy rains hit Colombia, rivers and streams are entering the ocean, carrying more sand and soil in their waters, and for this, most of the fish migrate further. shore, where the water is clearer and cooler.

“In January, fuel for our boats cost 8,000 pesos ($1.96) per gallon, now it costs more than 9,800 pesos ($2.70). Every week it grows a little more and the government is not helping,” Murillo told CNN.

Nicole Muñoz of Albacora, a small Bogotá-based organic fishing company that transports around 400kg of fish from the Colombian coast to the capital every week, also says gasoline is key to its business model.

“We use fishing boat fuel to transport food from shore to airports and then on planes, our entire logistics depends on it,” Muñoz told CNN.

While fish prices have not risen as much as other Colombian food sectors such as beef and poultry products, Muñoz believes prices will start to rise as the impact of more expensive fuel is felt.

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In April, the World Bank revised its growth forecast for Latin America and the Caribbean to 2.3% for this year, down 0.4 percentage points due to the impact of the war in Ukraine and global rising global prices. At the same time, the Bank estimates that Latin American countries have lost the equivalent of 1.7% of their GDP due to climate-related natural disaster over the past twenty years, and expects Latin American agriculture to be in the line of fire as the planet becomes warmer.

As everyday life becomes more expensive, could the popular anger seen in Panama, Ecuador and Argentina spread to Colombia and other countries in the region?

“The question is not if, but when,” says Guzman of the Colombian Risk Analysis Agency.

He argues that regional governments will not be able to spend enough to dampen the rise in the cost of living and appease their populations. “As the pockets shrink, people will lose patience not because of what governments are doing, but because these countries do not have the ability to increase social spending.”

Ecuadorian President Guillermo Lasso, for example, was forced by protests to limit the price of gasoline to $2.40 a gallon, a move that will cost the country another $3 billion by the end of the year, according to Finance Minister Simon Cueva. .

In Argentina, where the country’s finance minister was forced to resign due to excessive inflation, a food delivery worker from Buenos Aires told CNN that this year has been more vicious than the early years of the pandemic.

“Everyone is complaining,” Federico Mansilia, a father of two, told CNN. “Those who receive social support because they say it is not enough, and those who do not receive it because they want social support. At least during the pandemic, the authorities and the opposition worked together, now polarization and bitterness are growing again.”

According to Mancilia, the only hope for a moment of national unity is that Argentina wins the World Cup in Qatar at the end of the year.

“It will really bring the country together. If we win, everyone will be happy, neither inflation nor gas prices will bother us. But now things are pretty bad.”

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