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Price Cap on Fuel: Proposals Sent to Gov’t to Save Gas Stations

Hungary Today 2022.02.21.

On Monday morning, representatives of gas stations and the government met for talks. Retailers tried to highlight the increasingly hopeless situation that has been dragging on for weeks due to the fuel price freeze. The Association of Businesses and Employers (VOSZ) has proposed to reduce the negative impact through a compensation payment, an interest-free loan, or tax and contribution refunds. The government continues to insist on freezing the price of gasoline to protect Hungarian families, but is ready for consultations with representatives of small gas stations, responding to the proposals of the State Secretary for Economic Strategy. The government expects constructive and detailed plans by the second half of the week.

This article was originally published on our sister-site, Ungarn Heute.

On Monday morning, representatives of gas stations started to discuss possible solutions with the Ministry of Innovation and Technology (ITM) that would mitigate their losses due to the price freeze of fuels, said the secretary-general of the National Association of Entrepreneurs and Employers (VOSZ), László Perlusz.

“The essence of these proposals is that not only gasoline retailers, but also retailers would bear the burden of current price maximization.

We do not deny that the measure is necessary, we accept that it is a necessary, forced step in the fight against inflation, we also accept the social necessity, but we try to point out in the negotiations that in this situation the small businesses will go bankrupt,”

Perlusz stressed after the talks.

The proposals are:

  • the structure of VAT and excise tax collection should be reviewed immediately
  • the Hungarian companies affected should be granted a form of compensation proportional to the loss, turnover, or volume of sales, or proportional to the size of the municipality they have to serve
  • it should be considered whether the retail price should be aligned with the wholesale price
  • Preferential financing: low-interest loans or interest-free loans
  • Reduce uncertainty in the market: decide what will happen to the price freeze in three months and who will bear the burden then.
From Now On, All Gas Stations Lose Money on Fuel Sales
From Now On, All Gas Stations Lose Money on Fuel Sales

Gas stations make more than an 8 forints loss when they sell a liter of gasoline, and an 18 forints loss when they sell a liter of gas oil. This results from the fact that the purchase price is higher than the capped consumer price.Continue reading

The government insists on a fuel price cap but is willing to negotiate with companies

According to László György, the government made the decision on the fuel price freeze in the interest of protecting families, but it is open to listening to the views of small businesses. On Monday morning, it met VOSZ and Mobil Petrol, which operate the small gas stations in most cities, precisely for this reason.

The talks were forward-looking, a constructive approach to the situation was agreed upon, and the common goal is to contain inflation and protect Hungarian families from price increases from abroad,”

the state secretary continued.

The Mobil Petrol representative reportedly indicated that their chain did not want to participate in the demonstration and signature collection, because the goal was not to “make the situation worse” but to find a constructive solution. Company representatives also offered to represent the views of other small businesses.

In response to a question, the politician said there was no indication yet that a gas station would cease operations, nor was it necessary to appoint a temporarily registered operator to run a gas station due to a closure.

Hundred of Gas Stations Across Hungary Already Restricting Gas Sales Due to Price Cap
Hundred of Gas Stations Across Hungary Already Restricting Gas Sales Due to Price Cap

In reaction, the head of the Prime Minister’s Office said the government does not plan any compensation, because "we do not want to help the gas stations with taxpayers' money".Continue reading

In November of last year, the government had the price of unleaded-95 gasoline and diesel fixed at a level of 480 forints per liter. Without the measure, people would have to fill up at gas stations today at prices well above 500 forints due to global market developments. The freeze on fuel prices was recently extended for another three months and will remain in effect until May 15.

MOL’s wholesale price already exceeded the retail price last Thursday, the oil company sold gas oil for 493 forints gross and 95 gasoline for 480.4 forints to gas stations, while the government has decided that they cannot sell the two fuels for less than 480 forints. Therefore, as of Friday, gas stations are making a loss of more than 8 forints if they sell a liter of gasoline, and 18 forints if they sell a liter of gas oil.

Several owners have already stated that they can no longer keep up and will either have to close or impose volume restrictions. However, many service stations are already asking their customers not to fill up with them.

Featured image: illustration via Pixabay

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