Fuel sales from the US to Cuban businesses bring a taste of capitalism to Havana

Gasoline for $38 per gallon is sold in cramped apartment. Diesel is being sold on Instagram to reggaeton music by a celebrity. Cuba's communist sector of energy is experiencing capitalist cracks six decades after Fidel's revolution.

The exception that permits U.S. companies to export fuel directly to Cuban private businesses, under Washington's crippling?oil embargo against Cuba has triggered a chaotic black-market and opened up a tightly controlled energy sector by the government since Dwight Eisenhower occupied the White House. After the U.S. ousted Venezuelan President Nicolas Maduro from office in January, oil shipments to Cuba's traditional supplier Venezuela and Mexico abruptly ceased. U.S. Coast Guard cutters are patrolling the waters near Cuba while sanctions and threats have discouraged tankers from setting sail.

The embargo is affecting essential services run by the state, such as healthcare, public transportation and schools. Under the Commerce Department's exception, however, only a small amount of fuel is now reaching restaurants, retailers, and taxis. This is the first time that U.S. fuel has been landed on the Caribbean Island since Castro nationalized the refineries following the 1959 Revolution.

It is not possible to determine which U.S. oil companies are supplying fuel to Cuba. However, there are no signs that major oil traders have been involved. Some of the fuel is sold on the black-market, allowing those with the means to maintain their gas tanks and home generators. This helps the public transport system, rolling blackouts and the faltering water supply in the country.

The new system, while providing some relief to the poor, is increasing wealth disparities. Amarilis Sánchez, 53, spent hours waiting at a Havana bus stop on a recent afternoon in July. She had come to Havana to celebrate the birthday of her daughter, but was now losing hope that the bus, which costs 2 pesos to take home, would arrive.

A few taxi drivers were leaning against antique cars across the street. Ismael, one of the taxi drivers, offered to take Sanchez but said the trip would be 1,000 pesos. This is 500 times more than the bus because of the black-market price of diesel and gasoline, the fuel that many Cuban cars run on.

Sanchez, who is unemployed, could not afford to do this. She said that her plan was for her to wait until the sun went down and if it didn't arrive, she would sleep at the house of her daughter and then return the next morning.

Backroom Deals and Social Media Ads While the 900k barrels of U.S. Fuel imported between February and May were only enough to meet the country's needs for energy for nine days, they have led to "big" changes. Reporters found this out during their visits to legal wholesalers and black market distributors as well as in discussions with business owners and economists. Havana fell into darkness when the national grid failed just before 11 pm on a Sunday night this month. However, generators powered by imported fuel kept a few shops and restaurants lit. In plain view, a thriving resale marketplace has sprung up.

In a central Havana convenience store, stocked with sodas, beer, and crackers, on another day customers played pool at the entrance. The shopkeeper keeps gasoline in a large room at the back of the store. She sells it for $5 per liter, or $19 per gallon.

In a nearby tenement, a man advertises gasoline online and hoards the fuel?in his tiny apartment, despite the dangers of fire, explosions, and toxic fumes. WhatsApp groups devoted to?illegal fuel sales are on the rise.

The black-market price peaked this spring at an eye-watering $10.00 per liter ($38.00 per gallon), before falling as imports increased. In February, in an effort to avoid the paralysis caused by the oil blockade the government allowed private companies to import fuel to use themselves. Cuban legislators approved in June a comprehensive package of economic reforms to open the energy sector up to foreign and private investors. Although this package is not yet fully implemented, it was approved by Cuban lawmakers in June. The reforms would open up the energy sector to private and foreign investors.

In a social media viral advertisement for such a company, a model who is the ex-girlfriend a Cuban reggaeton singer struts around a warehouse full of industrial bulk containers filled with diesel while Daddy Yankee's "Gasolina", a hit song by Daddy Yankee, plays in the background.

A spokesperson from the company that created the advertisement, A Granel said they only sell to registered private businesses. The company charges $2.50 per liter for a 940-liter tank.

CUBA GAS STATIONS UP TO GRABS? Manuel Marrero Cruz, Cuba's Prime Minister, said late in July that Cuba had approved the first foreign venture to import and sell fuel on the Island. He didn't identify the company.

Cuban law prohibits companies from reselling fuel imported without express authorization. Cuba has not yet approved retail sales despite the reforms that indicate private companies may be able soon to operate some of the distinctive Cupet red and green gas stations.

Oniel Diz, the founder of Havana's consulting firm Auge, stated that some state-run gas stations store U.S. gasoline, which they can only disburse to vehicles registered with specific private companies. Cuban authorities have not responded to requests for comments. On July 29, President Miguel Diaz Canel denounced Washington's "genocidal" siege of the island. He said that the United States was not behind economic reforms and promised no "massive" privatization of assets. In response, State Department spokesperson Tommy Pigott stated that Washington acknowledged "the significant humanitarian need" of Cubans while accusing Cuban officials of incompetence, diverting resources without evidence. He stated that private businesses, non-governmental organizations, and diplomatic missions import fuel, mainly from the United States. However, he did not respond to questions regarding the impact of U.S. policies on Cuba's high prices and black market.

The average monthly government salary is only $10 (roughly 6,700 pesos), so imported fuels are out of reach for most of the island's nine million residents.

Fuel sold on the blackmarket is illegal in Cuba and violates U.S. export regulations, which state that fuel can only be used by the private sector and not the Cuban government.

Jorge Pinon, an energy expert and former oil executive from Cuba who works at University of Texas at Austin, stated that "it looks good on paper but there is no monitoring of the people's compliance" with the restrictions.

The news agency was not able to determine the amount of U.S. gasoline that reaches the black markets, nor could it find any evidence that the fuel ended up in Cuban officials' hands or government entities sanctioned by the U.S.

Diaz stated that other countries such as Mexico and Panama have also exported small amounts to Cuba's Private Sector in recent months.

STATE CONTROLS?PORTS and GAS STATIONS

Fuel destined for U.S. private buyers is currently required to pass through state-owned ports and storage tanks controlled by entities sanctioned by the U.S.

Diaz says that private Cuban companies enter into service agreements for the use state infrastructure with these entities, paying?11 cents per liter. No evidence was found that fuel is being diverted in this process.

Jeremy Paner is a former U.S. Treasury Department Investigator who advises businesses.

Cuba has said it will continue to relax restrictions and encourage private investment but it is unclear how far these reforms will extend.

Mayra Espina is a Cuban sociologist who specializes on poverty. She says that the few supplies of expensive U.S. gasoline don't even begin to compensate for the volume of fuel Trump's embargo has kept out.

She said, "At least it has prevented the country from being paralyzed." For the vast majority who depend on public services, "it increases and entrenches inequalities." Reporting by Laura Gottesdiener in Havana and Ayose Naranjo in Mexico City. Claudia Parsons edited the piece.

(source: Reuters)