Hungary extends fuel price cap

February 16, 2022

On Saturday, Prime Minister Viktor Orbán announced a three-month extension of a on standard  in Hungary. The cap came in to effect on November 15 and would have ended on Sunday. The government hopes to undercut inflation and help the economy with this move, but does not indemnify petrol stations for their losses. A is scheduled for April 3, for which all opposition parties currently in  but one have  to beat the ruling, which is now in its twelfth year in tenure.

Orbán announced the extension in his annual speech, claiming The official gazette,, published the corresponding government resolution No. 39/2022 a day later. A week earlier, deputy finance minister said to news agency  that tax authority checks on over 2000 fuel stations had found no recurring price cap violations but 12 violators were fined a total of 3.2 million (USD10140). , Tállai added.

Orbán said Price-aggregator site holtankoljak.hu put uncapped prices to HUF512 for gasoline, and HUF530 for diesel, and reported that wholesale prices have exceeded consumer prices since February 4. Based on the price aggregator's data, Napi.hu reported three stations had closed permanently in the first week of February because of the price cap. By law, the government can appoint new operators for closed stations.

On November 10 the government had decided to introduce the HUF480 (USD1.52) price cap, and then briefed the press about it the next day. The official gazette published the related act, government resolution No. 624/2021, on the day of the announcement. The follow-up resolution No. 626/2021, published on November 13, detailed the procedure. The cap applies to and standard diesel, and does not cover  (LPG) or premium fuels, but stations have to sell premium fuels at this price, if they do not sell standard ones.

In effect, the losses are incurred by petrol stations as they cannot negotiate wholesale prices. During the November 11 press briefing, Minister of the Prime Minister's Office said they do not plan to compensate for these losses, but added. The following day, the Hungarian Petroleum Association's secretary general Ottó Grád told that owners of small, independent stations may think about closing. In contrast to the press briefing, the detailed resolution dictates that petrol stations cannot close temporarily or shorten their opening hours.

The government does not plan to reduce on fuel. The oil bulletin of the European Commission showed last week that out of the total consumer price in Hungary, 47% is tax for unleaded 95, and 45% is tax for standard diesel.

Cumulative data for 2021 by the Hungarian Petroleum Association shows that volume-wise unleaded 95 makes up for 79% of all gasoline, and standard diesel makes up for 88% of all diesel sales in the country. Between 2020 and 2021, year-on-year consumer prices for November 8 went up from HUF332 to 506 for unleaded 95, and from HUF341 to 517 for standard diesel, according to price-comparison site holtankoljak.hu. 444.hu reported that the worsening HUF-USD exchange rates caused prices to climb even in July, when crude oil prices were dropping.

The reported inflation hit 7.9% in January. In his speech announcing the extension, Prime Minister Orbán claimed the fuel price cap lowered inflation by 0.5%.