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Hungary’s fuel price cap untenable,

analysts say

HUNGARY DISRUPTIONS in fuel supply in Hungary are stock is equal to 8-9 days of consumption.
inevitable even as the government restricted The measures did little to dampen demand
Even at full capacity, regulated prices to private individuals and man- for fuel, as company-owned cars are unlikely
MOL’s plant can’t meet dated the release of diesel fuel from the strategic to make significant cutbacks in fuel usage. Fuel
domestic demand alone reserves, according to analysts. sales soared in H1, up 33% y/y as cheap prices
and foreign companies The government narrowed eligibility to the proved to be of little incentive for households to
are less included to HUF 480/litre (€1.2) regulated price for motor reduce consumption.
fuel Hungary at below fuel to private individuals, and corporate-owned To add insult to injury, OMV’s refinery in
market prices. vehicles now have to pay the market price from Schwechat is still not back into full operation
Saturday. The move came as Hungary’s leading after maintenance work and Unipetrol’s Litvinov
oil and gas giant began maintenance work at its refinery in the Czech Republic was shut down
Danube refinery, leading to a 65% decline in die- after an explosion two weeks ago.
sel output. Before the government set a cap on fuel prices
Even at full capacity, MOL’s plant can’t meet last November, there were a dozen companies
domestic demand alone and foreign companies importing diesel to Hungary, but big players like
are less inclined to send fuel to Hungary at below Shell and OMV temporarily suspended deliv-
market prices, Erste Bank energy analyst Tamas eries, which at present is done by MOL alone,
Pletscher told online news site hvg.hu. Pletscher noted.
After the decree, which came into force hours Logistics is also overstretched, as every coun-
after a press conference on Saturday, the majority try in the region has been swooping on available
of vehicles can still refill their tanks at subsidised supplies and low water levels on the Danube are
prices and companies will not import to Hun- hampering transport, according to the analyst.
gary because prices on foreign markets are much “If there is going to be a shortage somewhere,
higher, he added. it will happen first in Hungary”, he noted.
Wholesale prices are also capped at HUF480 The solution would be to reduce demand and
per litre since spring. increase supply, but thanks to distorted prices,
The government announced on Saturday the this is not possible, the analyst said.
release of 184mn litres of diesel from strategic The government extended regulated prices
reserves, or 24% of the total diesel and crude until October 1, but Pletscher said it would be
in the reserves, to ease the supply squeeze, but very unlikely to keep to that promise without
analysts say the impact will be short-lived, as the major supply disruptions or even shortages. ™

P10 www. NEWSBASE .com Week 31 05•August•2022