Thursday , June 1 2023

Government pressures to reduce gasoline prices


11/23/2018 – The Executive Power began a discrete but tenacious negotiation with oil companies. The goal is to achieve a 10% fall in fuel prices, at least in the "premium" in December. Until this year, the largest amount of octane oil has increased by 68%. At Buenos Aires YPF stations, the liter of this product is $ 44.01, a sum that is higher in the suburbs and within the country.

"There is a carbon tax update in December, but we believe petroleum companies have already reached import parity (the import parity price on which local yields are measured) and now have to reduce the amounts to 10%, at least in first (diesel) ", detailed from Pink to Clarin. "Petroleum companies resort to imports for refining, if the price of imports is what they are considering, the logical thing would be that they will fall," said an official who asked not to be mentioned.

In the Executive Branch, they say they have tolerated the rise in international oil prices, which reached $ 85 at the beginning of October. But this has now changed the scenario and the oil is declining in the area of ​​USD 62 / barrel in the case of Brent, the variety that is considered in the country.

In executive power, they will raise these arguments with the YPF authorities, but they will also be able to take Axion and Shell, the other major market players. In any case, the official conviction is that YPF has a leading position on the market to pull the rest of the market.

A week ago, when it was known to raise biofuels – which were carved in the cost of gasoline and diesel – the Ministry of Finance issued a statement. "Rising biodiesel prices (…) will not affect the pump, first because the relative impact on fuel prices would be negligible: 0.2% for diesel and 0.3% for diesel," they said.

In oil companies, they still do not comment on the position that executive power will put forward. I admit that the export parity is close to or at current price levels, for example in super-diesel. However, they note that they have not regained their income at the devaluation rate.

The price of Brent oil is down 14% in November. Only this week they lost 6%, and in the cumulative year (ie, compared to the same date in 2017) there is also a decline of 1.6%. As a counterpart, although the depreciation of the peso was stopped, the dollar sold at $ 17.70 a year ago, less than half now.

"The recent fall in the exchange rate and the oil price have left the current amount of fuel above border prices (import / export parity), which is why oil companies have no margin for price increases, rather they should assess the possibility reducing them, "warned the Treasury a week ago.

Energy Secretary Javier Iguacel will support these arguments in dialogue with oil companies, according to official sources.

In October, gasoline shipments decreased by 6%, and the decrease was more pronounced in the first, if it was a double figure. In November, YPF raised prices by 2.5%, while Raizen (Shell management) and Axion doubled and rose between 5% and 7%. But they withdrew in a short time.

"The market has shown a high price sensitivity these days," characterized by stations. Raizen and Axion resumed initial growth and limited it to be consistent with YPF. They grew up on a Friday and, between Monday and Tuesday, they have already reduced it.

The migration of branded customers (Shell, Axion) to which a slight increase has been applied (such as YPF) was more noticeable than on other occasions, they observed among companies. In one of the companies they reported a 30% decrease in sales from customers who went to YPF.

Consumer reaction has fueled the government's intention to require oil companies to cut back. According to company estimates, this possibility is "complicated" for gas oil, which is still behind the "import parity".

The data that petroleum companies manage for November are a certain stabilization of sales. The October floor would have returned. Rebound is inadequate, and is still more evident in "super" fuels than premium ones.

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