Budapest – The Hungarian government announced Monday a series of measures to curb rising fuel prices, including a nationwide price cap on gasoline and diesel, effective midnight. The move comes as international oil markets experience significant turbulence linked to geopolitical instability in the Middle East and disruptions to oil supplies from Ukraine. The government’s intervention aims to protect Hungarian families, businesses, and farmers from the escalating costs of fuel, a concern amplified by broader inflationary pressures.
Prime Minister Viktor Orbán stated the decision was prompted by a sharp increase in international oil prices, impacting fuel costs across Europe. The price cap sets a maximum retail price of 595 forints per liter for 95-octane gasoline and 615 forints per liter for diesel. This intervention applies to vehicles registered in Hungary and holding a valid Hungarian registration document, extending coverage to the agricultural sector, transportation companies, and businesses.
Fuel Price Caps and Tax Adjustments
In conjunction with the price caps, the government will reduce taxes on fuel to the minimum level permitted by the European Union. According to National Economy Minister Nagy Márton, this will result in a decrease in the excise tax on gasoline from 158.8 forints to 139.55 forints per liter – a reduction of 19.25 forints. The excise tax on diesel will be lowered from 148.76 forints to 128.28 forints per liter, representing a decrease of 20.48 forints. Portfolio.hu reports these adjustments are intended to offset the impact of rising global oil prices on consumers.
This move represents a significant shift in the government’s approach to fuel pricing. Previously, the government had consistently argued against tax cuts on fuel, maintaining that market fundamentals were the primary drivers of price increases. Just a week prior, Nagy Márton noted on Facebook that “the tax content of fuel prices in Hungary is one of the lowest compared to neighboring countries. The fuel prices are mainly driven by the price of the raw material.”
Impact on the National Budget and Supply Security
The reduction in fuel taxes is expected to result in a revenue loss for the already strained national budget. Estimates suggest a potential shortfall of approximately 80 billion forints for the remainder of the year, assuming the tax cuts remain in effect and a previously scheduled inflation-linked tax increase in July is also postponed. ORIGO reported on the announcement.
To bolster supply security, the government will also release the 45-day state strategic fuel reserve. Nagy Márton announced that fuel wholesalers will receive gasoline and diesel at a price below the capped retail price, facilitating the maintenance of the price controls at the pump. The government has prohibited the export of crude oil and gasoline and diesel fuel, and pledged to crack down on any abusive trading practices. These measures, according to the cabinet, are designed to ensure a stable fuel supply for the Hungarian market amidst international energy market tensions.
Further Measures to Stabilize the Market
The government is taking additional steps to prevent market distortions, including a ban on the export of crude oil and gasoline/diesel, and a commitment to strict enforcement against any exploitative trading practices. These measures collectively aim to stabilize the Hungarian fuel market in the face of ongoing international energy uncertainties.
The situation remains fluid, and the effectiveness of these measures will depend on global oil market developments and the government’s ability to enforce the fresh regulations. The coming weeks will be crucial in assessing the impact of these interventions on both consumers and the national economy.
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