Hungary extends fuel price cap

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Revision as of 15:08, 18 November 2021 by Xbspiro (talk | contribs) (Western name order: Ottó Grád; attributed exchange rate claims to, specified when)
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Tuesday, November 16, 2021

On Monday, a price cap on standard motor fuels went into effect in Hungary. The government hopes to undercut inflation and help the economy with the move, but does not indemnify petrol stations for their losses. Neighboring Croatia introduced a similar cap in October.

Fuel prices before and after the price cap initiation at a MOL petrol station in Szeged, Hungary (Image: Xbspiro)

The government made the decision last Wednesday, then announced it the following day at a regular press briefing. The official gazette published the related act, government resolution No. 624/2021, on the day of the announcement. Resolution No. 626/2021, published on Saturday, detailed the procedure.

The HUF480 (USD1.5) price cap applies to unleaded 95 and standard diesel, and does not cover premium fuels or liquefied petroleum gas (LPG). The Saturday resolution requires stations to sell their premium fuels at this price, if they do not sell standard fuels.

In effect, the losses are incurred on petrol stations. During the press briefing, spokesperson Gergely Gulyás said they do not plan to compensate for these losses, but added "vendors cannot be forced to vend" ((hu))Hungarian language: ‍kereskedőt kereskedelemre kötelezni nem lehet. On Friday, Hungarian Petroleum Association's secretary general Ottó Grád told ATV that owners of small, independent stations think about closing.

In contrast to the press briefing, the resolution published on Saturday dictates that petrol stations cannot close or shorten their opening hours. If a station would have to suspend its operation, the government can appoint a new operator for the station.

File photo of government spokesperson Gergely Gulyás (Image: Holaci)

The government does not plan to reduce tax rates on fuel, but plans to revise the situation after three months. Last week's oil bulletin from the European Commission shows that, out of the total consumer price in Hungary, 46% is tax for unleaded 95, and 43% is tax for standard diesel.

Data by the Hungarian Petroleum Association shows that volume wise unleaded 95 makes up for 78% of all gasoline, and standard diesel makes up for 87% of all diesel sales in the country, as of 2021. Year-on-year consumer prices for November went up from HUF332 to 506 for unleaded 95, and from HUF341 to 517 for standard diesel, according to price-comparison site reported that degrading HUF-USD exchange rates caused prices to climb even in July, when crude oil prices were dropping.

Last Monday, three days before the announcement, József Molnár, chief executive officer of MOL Group, a Hungarian oil company, sold 75 thousand of his MOL shares for HUF 203 million (USD 633 thousand).