Iraq Has Worst Fuel Shortage Since '03

Aug 13, 4:28 PM (ET)

BAGHDAD, Iraq (AP) - Under a scorching sun, Baghdad taxi driver Sameer Abdul Razzaq wraps a wet towel around his head and waits for gasoline in a line stretching a mile. "I've been here since 6 a.m.," he said Sunday. "If I'm lucky, I'll get to the end of the line by sunset. I actually think I might end up spending the night here."

This is the capital of what should be one of the world's great oil producers, but corruption and insurgent attacks have Iraqis mired in their worst fuel shortage since Saddam Hussein was ousted, with black market gasoline costing as much as $4 a gallon.

The official price is $1 a gallon, but the fuel is often unavailable, forcing most Iraqi drivers to shell out the higher price to streetside vendors or wait in long lines at gas stations.

The shortage affects other petroleum products too. A cylinder of cooking gas costs about $18 on the black market - double the price a few months ago.

All that causes ripple effects that compound problems facing an Iraqi public weary of bloodshed, sectarian strife, the presence of U.S.-led forces and the government's inability to restore peace.

Taxi drivers have quadrupled their fares. Higher delivery costs for food and other essentials are passed on to consumers - many already living on the margin.

"We're going to switch to a small kerosene stove instead," housewife Amaal Ahmed Jabbar said after paying premium prices for cooking fuel.

The irony is especially bitter in a country that sits atop the world's third-largest proven petroleum reserves. Iraq's estimated 115 billion barrels are exceeded in the Organization of Petroleum Exporting Countries only by Saudi Arabia and Iran.

Iraq has been plagued by periodic fuel shortages since the 2003 U.S.-led invasion. But the current crisis comes amid higher demand for fuel to power generators and air-condition homes and offices, with summer temperatures topping 115 degrees.

The shortage is so bad that even a gas station inside the Green Zone, home of major Iraqi government offices and the U.S. Embassy, ran out of fuel Sunday afternoon.

The government blames the problem on insurgent attacks on pipelines and other infrastructure, which snarl the distribution system.

"I realize that people are really suffering from the lack of energy and electricity," President Jalal Talabani said Sunday. "But this is not the fault of the government ... terrorists have blown up many power stations as well as the pipeline" that delivers crude oil from the northern fields around Kirkuk to the main refinery in Beiji, 155 miles north of Baghdad.

The Beiji facility had a prewar capacity to refine 2 million to 2.25 million gallons of gasoline a day. It is now producing less than 260,000 gallons of gasoline a day, Oil Ministry spokesman Assem Jihad said, citing electricity shortages and threats to refinery operators as the main sources of the problem.

Last week, the main oil storage facility in Latifiyah, about 20 miles south of Baghdad, had to shut down after workers received death threats.

More than 250 Oil Ministry officials, workers and security guards have been killed since the collapse of the previous regime, according to the ministry.

The U.S. Energy Information Administration estimated that 315 major attacks have struck pipelines, electricity plants and other energy infrastructure between April 2003 and June.

The attacks have left the country struggling to restore oil production to prewar levels of about 2.5 million to 3 million barrels a day. As of May, production stood at about 1.9 million barrels a day, U.S. officials said.

The International Relations and Security Network, a Swiss group that promotes exchanges of information among security professionals, also blamed widespread corruption within the Oil Ministry.

Last year, 450 Oil Ministry employees were fired for illegally selling oil and petroleum products. In an April report, the Oil Ministry's inspector general Ali al-Alaak estimated about $4 billion worth of petroleum products were smuggled out of Iraq last year, including gasoline and crude oil siphoned from pipelines.

All that has added to the deep sense of pessimism among Iraqis.

"The ministers are busy with one thing only, and that is touring the world as we wallow here in the Middle Ages," said lawyer Ahmed Mohammed Ali, 55. "Everyday I take a container to the gas station to get some fuel to run my generator. It takes me up to five hours and sometimes all I get is humiliation by the security personnel in charge of the station."

Last month, Iraq's Oil Minister Hussain al-Shahristani predicted that Iraq's oil production would double over the next four years to 4 million barrels a day - a forecast that some petroleum experts thought was overly optimistic.

Hassan al-Jubouri, who runs a ceramics workshop, says he's going broke.

"My workshop is closed because I cannot run the generator," he said. "My family is without a source of living due to this shortage."