Expert Analyzes Cuba's Oil Crisis: Two Potential Solutions as "Zero Hour" Nears

Jorge Piñón, a renowned oil expert and director of the Energy Program for Latin America and the Caribbean at the University of Texas, has raised the alarm that Cuba's energy crisis is on the brink of becoming critical if fresh fuel supplies aren't secured soon.

Piñón warned that the island is nearing a "zero hour" scenario due to a severe lack of oil, which threatens essential sectors such as electricity generation, transportation, and significant portions of the economic activity.

In an interview with Radio Martí's program "Las noticias como son," Piñón highlighted the severe shortage of diesel and other oil derivatives in Cuba, exacerbated by the lack of new fuel shipments in recent weeks.

Cuba's daily diesel consumption hovers around 20,000 barrels, yet since the start of January, only a minor shipment from Mexico has been received. No new tankers with crude oil or derivatives have been detected entering Cuban ports since then.

The Waiting Game: Russian Fuel Tankers

While several vessels laden with Russian fuel remain virtually stalled in the Atlantic, awaiting the green light for unloading in Cuba due to political or authorization delays, the energy crisis deepens.

Piñón attributes the crisis not only to reduced shipments from allies like Venezuela, Russia, and Mexico but also to the crumbling infrastructure of Cuba's electrical system. The country's aging power plants suffer from neglect and operational constraints, leading to increasingly frequent blackouts.

Comparisons to the "Special Period"

The current situation draws comparisons to the "Special Period" of the 1990s, although now with a more fragile economy and an even more dilapidated energy infrastructure.

Private Enterprises: Not a Viable Solution

To counter the shortfall in state fuel supplies, the Cuban government recently allowed micro, small, and medium enterprises (Mipymes) to import fuel privately. However, Piñón argues that logistical and economic challenges render this approach ineffective.

Operations involve isotanques, each holding around 6,600 gallons (approximately 154 barrels), sourced from the United States and shipped from ports like Puerto Everglades or Houston to Mariel in Cuba. From there, the fuel must be trucked inland—a task hindered by the nation's shortage of diesel fuel for distribution.

Economic Viability Under Strain

The recent spike in diesel prices compounds the issue. "If these isotanques were purchased two weeks ago when diesel was under $3 per gallon, the situation is now dire, with prices exceeding $4 to $4.50 per gallon in the United States," Piñón explained.

This price hike makes both the fuel and maritime transport to Cuba significantly more costly. Piñón questions whether ordinary Cubans can afford such steep prices.

Moreover, setting up an operational isotanque in Cuba—accounting for the fuel, infrastructure, security, lighting, and fire safety requirements—can cost around $50,000. Yet, even if this initial investment is overcome, the underlying problem remains: how to replenish the first isotanque once emptied?

Legal Hurdles in Private Fuel Imports

The private import model faces not only logistical and economic challenges but also significant legal restrictions. U.S. licenses for these operations, governed by the Office of Foreign Assets Control (OFAC), prohibit Cuban government entities from participating. This means imported fuel cannot pass through state-controlled terminals or networks like CUPET or CIMEX without violating licensing conditions.

With Cuba's fuel storage and distribution infrastructure predominantly state-owned, expanding the private model with small tankers would still require unloading at state terminals, thus breaching U.S. regulations.

Exploring Viable Solutions

Piñón believes the crisis leaves Cuba at an impasse. Even multiplying isotanques would have a negligible impact on national demand, as each unit is just "a drop in the ocean" compared to daily consumption.

He previously warned that March could become Cuba's most critical month if no new fuel shipments are on the horizon. In such a scenario, he suggests two realistic solutions that involve negotiation with the United States.

The first option would see the U.S. provide Cuba with refined products like diesel, gasoline, or liquefied petroleum gas from its inventories. Alternatively, Washington could grant a specific exception to Venezuela, allowing Caracas to send crude or derivatives to the island under a controlled arrangement.

Regardless, Piñón insists on sending already refined fuels, as Cuba cannot afford to lose weeks processing crude oil in outdated refineries with dwindling reserves.

Without a swift agreement, Cuba faces a looming near-total shutdown, with insufficient fuel to sustain its electrical and transportation systems.

Record Blackouts Amid Crisis

The severity of the energy crisis is mirrored in the power system's struggles. The Unión Eléctrica (UNE) projected a deficit of nearly 1,900 megawatts (MW) during Wednesday's peak night hours, one of the highest recorded recently.

The previous day, electricity service was disrupted throughout, with peak outages reaching 1,875 MW at 7:20 PM, according to the National Electroenergetic System's official report.

Breakdowns in several power plants, ongoing maintenance, and limitations in thermal generation continue to diminish production capacity. In Havana, electric service interruptions exceeded 22 hours on Tuesday, as reported by the capital's Electric Company.

Lengthy power outages have fueled social unrest, with reports of protests and pot-banging demonstrations in several Havana municipalities, including Cerro, Marianao, Plaza de la Revolución, and El Vedado.