The formal end of the pre-electoral 90-day fuel price freeze has arrived, with prices rising from today by a five percent rise on average.
The hike was the third since the Mauricio Macri administration imposed the freeze in mid-August as an immediate reaction to its electoral debacle in the August 11 PASO primaries.
However, the move could not be rigidly maintained in the light of the steep devaluation accompanying political uncertainty with fuel price increases of four and five percent authorised on September 19 and November 1 respectively.
Suppliers also expect another increase to kick in on December 1, Perfil reports.
Gabriel Bornoroni, the president of the Confederación de Entidades del Comercio de Hidrocarburos ("Confederation of Hydrocarbons Trade Entities"), told the newspaper last week that there will be a new increase in December due to a rise in fuel taxes and "another small price update by oil companies."
This latest hike puts a litre of state-energy firm YPF petrol at 50.19 pesos, with premium at 57.94 pesos and Diesel 500 at 46.99 pesos. Other energy companies have higher prices ranging up to 58.56 and 55.98 pesos for petrol and diesel respectively (over 63 pesos in the case of premium). Inland provinces also have prices around 10 percent higher.
The freeze expired at midnight on Wednesday with nobody in the sector expecting its renewal by the outgoing government and none came.
Even with the three hikes since September, companies estimate fuel price levels to lag 15-20 percent behind international levels so fresh increases at service stations are expected in the next few weeks. Yet 2019 increases (nine in total) are expected to add up to 30 percent, well behind an annual inflation forecast to be around 55 percent.
When Decree 566/2019 froze fuel prices at August 9 levels, the exchange rate was 45.19 pesos per dollar while world prices for the benchmark Brent crude were US$59 per barrel.
The freeze prompted both oil companies and provincial governments collecting royalties to take the Macri decree to federal courts and even the Supreme Court as “unconstitutional” but no ruling had been issued by the time the decree expired.
Decree hands Pampa Energía over a billion pesos
A decree by outgoing President Mauricio Macri on Thursday authorised Enargas regulatory agency to pay Pampa Energía over a billion pesos in compensation for this year’s devaluations affecting its contracts with gas suppliers and distributors.
This decree, confirming state guarantees under Decree 1053/18, benefits Pampa Energía owner Marcelo Mindlin to the tune of 1,218,755,759 pesos less than a month before the change of government.
Along with other oil companies the Pampa group has accessed this benefit on the strength of lawsuits and the pledge not to transfer exchange rate fluctuations to the consumer.