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Fuel consumption in Argentina falls after strong price increases, which will continue

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Natalia Kidd

Buenos Aires, Feb 11 (EFECOM).- Fuel consumption in Argentina fell after the strong price increases since last December, increases that will continue under the policies of the new Government of Javier Milei for the hydrocarbon sector.

According to various sources in the sector consulted by EFE, fuel demand at gas stations fell in January by almost 10%, except for a slight increase in YPF.

The decline in consumption had already begun to be felt in December, with a cut of 7.8% compared to November, according to data from the Argentine Energy Institute ‘General Mosconi’.

In a context of very high inflation and loss of purchasing power of salaries in Argentina, consumers reduced their charges at gas stations after the sharp price jumps recorded in December, January and at the beginning of this month of February.

“The first thing that has been noticed is a change in the consumption pattern, from ‘premium’ gasoline to regular gasoline. And in those oil companies with higher sales prices, a more pronounced drop in sales volumes is beginning to be seen.” , the president of the Confederation of Hydrocarbon and Related Trade Entities of Argentina (CECHA), Isabelino Rodríguez, tells EFE.

‘Super’ gasoline (the cheapest on the market) is currently sold at 744 pesos (87 dollar cents/79 euro cents) per liter at service stations in Buenos Aires of YPF, the largest hydrocarbon producer and marketer. of fuels from Argentina.

Until November 2023, the value of ‘super’ gasoline in the capital had accumulated an increase of 107% in the year, below the inflation of 160.9% accumulated in the year until that month.

But in December there was a monthly increase of 77.8% and in January, a 26.4% increase, as a result of the new policy of the Milei Executive of releasing the repressed prices of the economy and, in the case of fuels, bringing them at levels more in line with international markets and more profitable for companies in the sector.

Added to this was an increase of 6.43% on February 1, as a result of the Government’s decision to activate an update in certain taxes on fuel that the previous Administration had delayed and by virtue of which new increases are expected between March and May.

In this scenario, the price of gasoline has accumulated an increase of 139.2% since December, much higher than the evolution of the already very high inflation rate, 25.5% in December, according to official data, and 19, 4% in January, according to private calculations.

“Before, a liter of fuel was worth the same as a liter of bottled water. Now the relative price has been restored, but people’s income has not. That is why there is a drop in demand, which we understand is, for the moment, going to be growing,” says Rodríguez.

Fuel prices have a strong impact on the costs of freight transportation, thermal electricity generation and agricultural logistics, among other activities, and, therefore, have a strong impact on the formation of electricity prices. economy in general.

For years, fuel prices in Argentina have been heavily regulated. The South American country imports about 30% of what the domestic gasoline and diesel market demands and the rest is covered with locally produced and refined crude oil.

But the new Government that took office in December decided to end the so-called ‘criollo’ barrel, a subsidized price of crude oil for the domestic market of 58 dollars – compared to a current value of the Brent barrel of about 79 dollars -, which allowed maintaining ‘ fuel prices have been depressed.

The policy outlined by the new Executive now dictates that fuel prices tend towards the import value, which, according to sources in the sector, should be between 1 dollar and 1.20 dollars per liter, so, within this logic , fuels still have room to continue increasing.

Of course, this value will not be fixed since the so-called ‘import parity’ can vary depending on international oil prices and the exchange rate in Argentina. EFECOM

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