2023-10-18 22:17:00
On October 31, the fuel price freeze comes to an enda “gentlemen’s agreement” reached by the Minister of Economy, Sergio Massa, along with the oil and refining companies following the post-STEP devaluation. When asked how it will continue, in a context of stock shortages in some parts of the country, the Secretary of Energy, Flavia Royónhe anticipated: “It depends what happens on Sunday.”
The thing is that, in the event that the La Libertad candidate advances, Javier Mileywin in the first round, Royón anticipated that this will imply that the price of gasoline might even “double”, due to the implementation of dollarization, and to unify the price of the local market with the export price, which today reached a record as a result of the conflict in the Middle East. On the other hand, if Massa were to enter a runoff and still have a chance of being president, they will call on companies once more to establish a “path” of increases, in line with inflation, and that “takes purchasing power into account.” ”.
End of agreement
On Monday, August 14, the day following the primary elections, the Central Bank devalued and increased the official exchange rate by 22%. That week, Massa closed a price agreement with the oil companies, given that he had ended the Fair Price period, and at the same time to avoid a greater spike in inflation. They agreed to raise 12.5% and then keep prices frozen until October 31.
In any case, according to private surveys carried out by the Confederation of Hydrocarbon Business Entities (Characteristic) In these 3 months there were increases in some service stations in some parts of the country, in a context of fuel shortages. Although the Ministry of Energy was informed of the information, it did not proceed to impose any type of fine, given that the agreement was a “gentleman’s agreement” and did not involve anything in writing. In addition, they are holding talks to ask that they keep the domestic market supplied.
Looking ahead to October 31, Royón confirmed that The agreement reached in August comes to an end. When asked regarding the future of prices at the pumps, he answered: “It depends on what happens on Sunday.”
The future according to the elections
Royón warned that gasoline pmight have a sharp price increase in case Milei wins in the first round this Sunday: “The opposition proposes aligning domestic fuel market prices with international prices. But they don’t go down to earth what that means either. They have to consider three factors. First, they are all talking regarding a sudden devaluation. Libertarians talk regarding dollarization. Well, at what exchange rate? At $1000? So, that is an effect on the price of fuel.”
Furthermore, the Secretary of Energy added: “The other effect is that we have high international prices at US$90 per barrel, and with a lot of uncertainty due to the global context of the conflict in Israel and the Middle East. And on the other hand, the burden of fuel taxes is frozen. So, If you add all these components, we have to tell people clearly what we are talking regarding, doubling the price of fuel, increasing it by 150%, we have to bring it down to earth.”
When asked how much a liter of gasoline would cost if Milei’s energy plan were applied, Royón answered that this will depend on what exchange rate dollarization is carried out. So unlike the Ministry of Transportation, which revealed how much public transportation would cost without subsidies, Energy preferred not to give a specific number. “To define what value it would be at, we have to see what exchange rate dollarization is done without dollars,” said the engineer.
On the other hand, Ámbito consulted what the future of fuel prices would be if Massa continued in the race towards the second round. “As long as Sergio Massa is in charge, he will continue his policy, which is that of a price path according to inflation and the reality of the salary power of Argentines”assured the Secretary of Energy.
Regarding the opposition’s proposal to close the price gap between the barrel sold in the domestic market and the barrel for export, Royón considered: “The resources are Argentine and the associated costs are in pesos. So, the values of fuels in the domestic market have to have a correlation with the local reality.”
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