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Gasoline and diesel increase: new increases expected after the extra long weekend - Infobae
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Aumentan la nafta y el gasoil: esperan nuevas subas tras el fin de semana extra largo
Con el cambio de mes llega una nueva actualización de los impuestos que pesan sobre los combustibles. A ello hay que sumar el avance del dólar oficial y recomposición de precios del sector
www.infobae.com
March 22, 2024
With the change of month comes a new update on the taxes on fuel. To this we must add the advance of the official dollar and recomposition of prices in the sector
The increase would bring the accumulated increase in the year to around 50 percent (DyN)
In an economic context marked by high inflation and a drop in activity, the Argentine energy sector faces a new wave of increases in gasoline and diesel prices . Starting April 1, consumers will be impacted by a significant increase in the cost of fuel, attributed both to tax adjustments and to the fluctuation of the international market and national economic policy.
The update of fuel taxes, unfrozen since February, materializes in a 34.8% increase in the Liquid Fuel Tax (ICL) and the Carbon Dioxide Tax (IDC), which represents an accumulation of 376.61% since the beginning of the year. This measure, which seeks an annual tax collection close to 3,000 million dollars or 0.5% of the Gross Domestic Product (GDP), is part of a broader effort to achieve a fiscal adjustment of 10% this year, according to the goals established by President Javier Milei and Economy Minister Luis Caputo .
The impact of these tax adjustments translates into a nominal increase in taxes on gasoline of $29.96 throughout the country, and of $20.39 on diesel. However, Patagonia remains an exception to this rule, exempt from these taxes due to its status as a producer of oil resources. In the City of Buenos Aires, the impact varies depending on the type of fuel, ranging between 3.7% for super gasoline and 1.9% for premium diesel.
This increase, the fourth so far this year, will accumulate at least 50% in the price of super gasoline in the first 95 days of 2024. Despite this upward trend, fuel prices had begun to decelerate compared to to inflation since February, after a sudden recomposition after the November elections.
The one that will arrive with April will be the fourth increase of the year (Gustavo Gavotti)
The energy sector, under the direction of the Minister of Economy, was instructed to moderate increases in an effort to consolidate the downward trend in monthly inflation . In the medium and long term, however, the Government aims towards an almost total liberalization of the fuel market. In meetings with the sector, national officials revealed the official intention to allow refiners to purchase oil at international prices, at “export parity,” thus reflecting real costs in consumer prices.
These are the key factors that will drive prices:
- Fuel Tax Update: From April 1, the Liquid Fuel Tax (ICL) and the Carbon Dioxide Tax (IDC) will experience an increase of 34.8%. This adjustment is part of a regulation that adjusts these taxes based on the inflation recorded in the July-September 2023 quarter, which has led to a cumulative increase of 376.61% since the beginning of the year.
- Devaluation of the Peso : The monthly devaluation of the peso against the dollar, which was 2% in the official exchange rate, puts pressure on oil companies to apply an additional increase in fuel prices to compensate for the loss of value of the local currency against the US currency.
- Nominal Tax Increase : In nominal terms, specific taxes on gasoline will increase by $29.96 throughout the country, while for diesel the increase will be $20.39. These adjustments will directly impact the final price to the consumer.
- Adjustment for Export Parity : Refiners are interacting with the Ministry of Economy to be able to buy oil from producers at international values, which will eventually be reflected in the price at the pump. This translates into an upward adjustment to achieve export parity, the price that producers receive at the port.
In addition to the tax adjustments, an additional increase of at least 4% is anticipated in April, attributed to both the tax increase and adjustments by oil companies to compensate for the monthly devaluation of the peso against the dollar, which remains at the 2% guideline in the official exchange rate.
Export parity has not yet been reached, which suggests new future increases. At an informal level, parkers estimate that it will involve placing a liter of super gasoline at around, or above, a dollar per unit.
The Government's long-term strategy to liberalize the fuel market is not without challenges, especially with regard to the impact on the purchasing power of consumers and the competitiveness of local businesses.
