Hungary extends fuel price cap

Wednesday, February 16, 2022 

The price of unleaded 95 (top), diesel (centre) and liquefied petroleum gas (bottom) at a MOL petrol station in Szeged, Hungary before (left) and after (right) the cap first went into effect.
Image: Xbspiro.

On Saturday, Hungarian Viktor Orbán extended a price cap on standard motor fuels in the country by three months.

The cap went into effect on November 15 and would have ended on Sunday. By extending it, the government hopes to undercut inflation and help the economy. However, the extension does not indemnify petrol stations for their losses.

Orbán announced the extension in his annual speech, claiming "the "price-stop" proved to be effective in this case too, so we will extend it for an additional three months." ^{((hu))Hungarian language: ‍Az árstop itt is bevált, ezért három, további három hónappal meghosszabbítjuk.} The official gazette Magyar Közlöny published the corresponding government resolution No. 39/2022 the next day. A week before this, deputy finance minister András Tállai told news agency Magyar Távirati Iroda that tax authority checks on over 2000 fuel stations had found no recurring price cap violations. However, 12 violators were fined a total of HUF3.2 million (USD10140): "The stations are operating in line with the rules set, which is reflected by the fact no recurring violations have occurred in the past three months." ^{((hu))Hungarian language: ‍A kutak azonban betartják a szabályokat, ezt igazolja többek között az is, hogy ismételt jogsértés az elmúlt csaknem három hónapban nem történt.}.

He also claimed the cap lowered inflation, which Hungarian Central Statistical Office reported hit 7.9% in January, by 0.5%.

Orbán said "we have the fifth lowest fuel price [in the European Union]. We pay HUF480 [per litre;] without the "price-stop" we would pay well over 500 forints." ^{((hu))Hungarian language: ‍Az üzemanyag ára nálunk az ötödik legalacsonyabb. Ma 480 forintot fizetünk, árstop nélkül jóval 500 forint felett járnánk.} Price-aggregator holtankoljak.hu listed uncapped prices to HUF512 for gasoline and HUF530 for diesel, and reported that wholesale prices have exceeded consumer prices since February 4. Napi.hu reported based on the figures indicated that three stations had closed permanently in the first week of February due to the price cap.

By law, the government can appoint new operators for closed stations.

On November 10, the government decided to introduce the HUF480 (USD1.52) price cap, informing the press the following day. The official gazette published the associated act, government resolution No. 624/2021, the day of the announcement. The follow-up resolution No. 626/2021, published on November 13, detailed the procedure. The cap applies to unleaded 95 and standard diesel, but does not cover either liquefied natural gas or premium fuels. However, stations not selling standard fuels must offer premium fuels at the price.

Orbán on February 17, 2016.
Image: Moscow Kremlin.

In effect, the losses are incurred by petrol stations as they cannot negotiate wholesale prices. Minister of the Prime Minister's Office Gergely Gulyás told reporters at the November 11 press conference the government did not plan to compensate for these losses, but said "vendors cannot be forced to vend" ^{((hu))Hungarian language: ‍kereskedőt kereskedelemre kötelezni nem lehet}. The next day, the Hungarian Petroleum Association's secretary general Ottó Grád told ATV that owners of small, independent stations consider closing. The detailed resolution states that petrol stations cannot close temporarily or shorten their opening hours, despite the press briefing.

It is understood that the government does not plan to reduce the tax on fuel. The European Commission oil bulletin showed last week that the total share of taxation on petrol in Hungary was 47% for unleaded 95 and 45 for diesel. Cumulative data for 2021 by the Hungarian Petroleum Association shows that volume-wise, unleaded 95 makes up for 79% of all gasoline, and standard diesel 88% of all diesel sales in the country.

Holtankoljak.hu figures indicated between 2020 and 2021, consumer prices year-on-year from November 8 went up from HUF332 to HUF506 for unleaded 95, and from HUF341 to 517 for standard diesel. 444.hu reported weaker HUF-USD exchange rates caused prices to climb even in July, even when crude oil prices were dropping.

A general election is scheduled for April 3, for which all opposition parties currently in Parliament but one have united to beat the ruling Fidesz-KDNP alliance, which has ruled Hungary for 12 years.

Sources

• "Change in Consumer Prices" — Hungarian Central Statistical Office, February 14, 2022 (date of access)
• "Statistics of Motor Fuel" — Hungarian Petroleum Association, February 14, 2022 (date of access) (Hungarian)
• "Üzemanyagár-változás 2022.02.16-tól" — holtankoljak.hu, February 14, 2022 (date of access) (Hungarian)
• "Government resolution No. 39/2022" — Magyar Közlöny, February 13, 2022 (Hungarian)
• Gergely Szakacs. "Hungary's Orban extends fuel price cap until after April vote" — Reuters, February 12, 2022
• Magyar Televízió. "Orbán Viktor miniszterelnök évértékelő beszéde" — Youtube, February 12, 2022 (Hungarian)
• "Weekly Oil Bulletin" — European Commission, February 10, 2022 (PDF)
• Uj Péter. "Lelkesen ellenőrzi a NAV a benzinkutakat, hogy betartják-e az árstopot" — 444.hu, February 6, 2022 (Hungarian)
• "Üzemanyagár-változás 2022.02.04-től" — holtankoljak.hu, February 4, 2022 (Hungarian)
• "Government Decree 624/2021" — National Legislation Database, November 29, 2021 (PDF)
• "Üzemanyagár-változások" — holtankoljak.hu, November 14, 2021 (date of access) (Hungarian)
• "Government resolution No. 626/2021" — Magyar Közlöny, November 13, 2021 (Hungarian)
• Associated Press, Agence France-Presse. "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)
• Illés Szurovecz. "Szabadulnak a Mol-részvényektől a benzinár befagyasztása után" — 444.hu, November 11, 2021 (Hungarian)