A positive balance which traditionally existed between the export of crude oil and the import of derivatives it became almost non-existent in the first two months of 2023. While in 2019 crude oil exports in January and February totaled $1,061 million, imports of derivatives in the same period totaled $552 million. Thus, the positive balance was 47%.

However, in January and February 2023, this positive difference was reduced to 0.18%. This is because exports reached 1.137 million dollars, while imports of derivatives were 1.135 million dollars. Even in January, the number was against: 582 million dollars were imported, and 562 million dollars were exported.

The positive balance decreases over time.

THE FIRST TWO MONTHS EXPORTS IN MILLIONS IMPORTS IN MILLIONS % DIFFERENCES
in 2019 1061 dollars 552 dollars 48%
in 2020 1014 dollars 592 dollars 42%
in 2021 1096 dollars 549 dollars fifty percent
in 2022 1417 dollars 941 dollars 3.4%
in 2023 1137 dollars 1135 dollars 0.18%
Source: ECB

The phenomenon occurs due to two factors. On the one hand, the prices and quantity of crude oil fell, and on the other, the quantity of imports increased. According to Oswald Erazo, the executive secretary of the Chamber of Petroleum Distributors (Camddepe), there has always been a difference between what one gets for exported barrels compared to imports.

However, in recent months, the price of a barrel of derivatives (which the country imports) has been rising compared to a barrel of crude oil (which Ecuador exports). Erazo reminds that the gap per barrel of derivatives compared to crude oil was 20 dollars a few years ago, but after the pandemic it started to grow up to 60 dollars, and among the reasons for the increase in the price of derivatives is the limitation of refining capacity all over the world.

On the other hand, it shows that the Minister of Energy and Mining, Fernando Santos, has said that there has been a 30 percent increase in diesel consumption and that most of it will be smuggled. However, he explains that it is important to examine the data a little more closely, segment by segment: fuel consumption in the electricity sector has increased by 150%, probably due to the dry season. This fuel has a high subsidy. Meanwhile, fuel for the shipping sector has risen in price by 170 percent, although in the latter case there is no major problem, since this fuel has almost no subsidies.

For Jaime Carrera, executive secretary of the Observatory for Fiscal Policy (OPF), this phenomenon is worrying, Well, it shows Ecuador remains sensitive to the behavior of oil and their prices. On the one hand, it affects public accounts, because more money has to be invested in imports Less money goes into the budget. Let us remind you that in the first quarter of 2022 oil revenues amounted to 981 million dollars, and in the same period in 2023 they reached only 357 million dollars, i.e. $624 million less.

Besides, says Carrera, what happens it affects the oil trade balance, which has always been the one maintaining the non-oil balance. This worsening of the oil balance affected both the total trade balance and the balance of payments. He explains that in an ideal scenario, especially in a dollarized one, the balance of payments and trade should be positive. Positive balances mean more dollars coming in, which is healthy for an economy like ours.

As for fuel subsidies, they are likely to reach more than $3,000 million in 2023, according to Camddepe’s Erazo. However, in the current situation, the subsidies that Petroecuador expects to pay in the period from April to May 2023, compared to those from the period from March to April, have fallen slightly.

Erazo believes that the decline will be temporary, as the decline in recent months was associated with banking problems in the US and Europe. However, it is possible that the price will rise again, with the measures to limit the production carried out by the Organization of the Petroleum Exporting Countries (OPEC).

according to ethe latest report from Petroecuador, The subsidy for diesel 2 in the period from April 12 to May 11 is $1.07 per gallon, and for premium diesel $1.16. The subsidy taken by the state for each additional gallon of gasoline amounts to USD 0.30, and that for ecopain gasoline reaches USD 0.64.

In the previous period (March 12 – April 11), the diesel 2 subsidy was $1.20; that of premium diesel for $1.26; the extra gasoline subsidy is $0.38 and the ecopain gasoline subsidy is $0.64.