Oil Refinery Strike Cripples Brazil; Gas Rationing Nears

A crippling three-week strike at oil refineries here may come to a head Thursday as laborers miss their monthly paychecks for the first time and consumers and companies find themselves just days away from gas rationing.

“We all expect something to happen in the next 48 hours,” said Roberto Gozzi, director of the industry federation in the Sao Paulo suburb of Cubatao, an area economically equivalent to the Bay Area’s Silicon Valley. “Something has got to happen because we can’t continue like this.”

The strike--which has spawned other walkouts nationally--has closed seven of the nation’s 10 state-owned oil refineries and reduced the output of heating oil, gas and natural gas to a trickle.

Lacking fuel, companies throughout Brazil have shut down or drastically reduced production. Ships are languishing in port, and hospitals are cutting services. Cars have been lined up at gas stations in major cities. Shortages of domestic cooking gas have led to overnight lines across the country.

Most Brazilian consumers rely on bottled gas to cook with. And when forced to prepare meals on makeshift campfires, some residents in the Guarulhos suburb of Sao Paulo accidentally set fire to their houses.

This strike is a major test for President Fernando Henrique Cardoso’s 5-month-old administration and its efforts to hold down inflation and push the country toward privatization. It has also become a rallying point for unions.

Since the strike began May 3, about 250,000 laborers in other industries have piggybacked on the oil worker action with walkouts of their own, demanding higher salaries and protesting Cardoso’s efforts to privatize the many federal monopolies in the oil, mining, telecommunications and other industries.

In the past three weeks, cities and states across Brazil have endured sporadic strikes by train workers, bus drivers, college professors, teachers, social security employees, subway drivers and others.

Oil workers, whose median salary is more than five times the national average of $350 a month, are seeking a 27% raise. If Petrobras, the state oil company, and Cardoso acquiesce to this demand, economists say, Brazil could gallop anew toward runaway inflation as other unions stampede for similar salary increases to keep up with rising prices.

Although inflation has slowed considerably from the days last June when it was running at 50% monthly, it is still at almost 30% annually.

Ironically, analysts say, the oil worker strike has been good for Cardoso’s efforts to push a series of constitutional reforms through Congress that would put an end to state-run monopolies.

“What better argument can you have right now for getting rid of the state-run monopolies than this?” said Alexandre Barros, director of Early Warning Political Risk Analysis and Government Relations in Brasilia, the capital.