Hungary extends fuel price cap

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Tuesday, February 15, 2022 

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 holtankoljak.hu. 444.hu 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).

Sources

• "A MÁSZ tagvállalatok összesített üzemanyag értékesítései" — Hungarian Petroleum Association, November 15, 2021 (date of access)
• "Üzemanyagár-változások" — holtankoljak.hu, November 14, 2021 (date of access) (Hungarian)
• "Government resolution No. 626/2021" — Magyar Közlöny, November 13, 2021 (Hungarian)
• (AP, AFP syndicated). "Hungary to cap petrol and diesel prices as fuel costs surge" — Euronews, November 12, 2021
• Veronika Gulyás. "Orban Caps Fuel Prices Months Before Hungarian Elections" — Bloomberg, November 12, 2021
• "Bezárhatnak a független, kis benzinkutak a kormány döntése miatt" — ATV, November 12, 2021 (Hungarian)
• Magyar Televízió. "Kormányinfó" — Youtube, November 11, 2021 (Hungarian)
• "Government resolution No. 624/2021" — Magyar Közlöny, November 11, 2021 (Hungarian)
• Illés Szurovecz. "Szabadulnak a Mol-részvényektől a benzinár befagyasztása után" — 444.hu, November 11, 2021 (Hungarian)
• "Weekly Oil Bulletin" — European Commission, November 8, 2021
• "Director/PDMR transaction" — MOL Group, November 8, 2021
• "Croatia caps motor fuel prices for 30 days to help economy" — Reuters, October 14, 2021