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Hungarian government capping fuel prices

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Hungary – In view of the sharp rise in fuel prices in recent weeks, the Hungarian government has decided to cap the price of petrol and diesel at 480 forints (about €1.3) per litre from 15 November for at least three months. The decision was announced on 11 November by the chief minister in the Prime Minister’s Office, Gergely Gulyás.

Gasoline down 5.1% and diesel down 6.3% 

Compared to the current average price of fuel at the pump, this corresponds to a reduction of 5.1% for petrol and 6.3% for diesel. It is the first time such a measure has ever been taken in Hungary.

The decision, which Viktor Orbán still considered “risky” two weeks ago besides not ruling it out, has been described as a necessary response to the 38% increase in fuel prices in recent months. Neighbouring Croatia had already made a similar decision, capping the price of petrol and diesel at the equivalent of €1.5. 

Risk of artificial fuel shortages

The Hungarian government’s new measure is good for motorists but is being criticised by some. Tamás Pletser, an analyst from Erste Bank, has been quoted by Index as saying he believes that some wholesalers could challenge the decision in court on the grounds that their margins could be considerably reduced. Moreover, Pletser said, the products affected by the cap could run out from time to time at some stations, with a more serious shortage not being ruled out if prices keep soaring at the international level, as international wholesalers could prefer to sell their oil products to other countries.