Prices will increase from this Saturday due to a tax update

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Petrol and diesel prices will increase again this Saturday due to the government’s decision To raise taxes on liquid fuels (ICL) and carbon dioxide (IDC) once again. It is estimated that the increase is around 4% due to the tax update – which was postponed last month so as not to affect the inflation index – but also due to a possible transfer of the dollar’s movement. Since Xavier Meili took office, the price of fuel has doubled: except for today’s comment, it has increased by 110%.

If companies pass on the tax hike, gasoline and diesel would rise by at least 1.2%. Companies –YPF, Shell, Axion and Puma Energy– can, moreover, The transfer is based, as stated, on the monthly devaluation – the crawling peg of 2% – which the Central Bank (BCRA) systematically applies.

,Stimulating the growth of the economy by guaranteeing a sustainable fiscal path“It is appropriate to partially postpone the effects of the increases that are due to apply until June 1, 2024 for unleaded gasoline, virgin gasoline and diesel,” says the decree published this week.

Fuel prices have increased by 110% since Xavier Miley took officedistributed in five increases of 38%, 27%, 6.5%, 7.5% and 4.6%. The increase is explained by the increase in the exchange rate, which has a direct impact on the dollarized cost structure of the industry, and Update of fuel taxWhich was frozen by the previous government since 2020.

In the city of Buenos Aires (CABA), a liter of YPF Super gasoline costs $870, while the Premium is $1074..The Super Diesel costs $918, while the Premium Diesel costs $1,167.

“As understood from Decree 466/24, In the case of gasoline, the increase in both taxes will be in the order of 8% and in diesel oil, the increase will be 11%.. has nothing to do with the expected 20%. Equals, The suggestion is to wait till the detailed table comes out in AFIP“, Said William LegoGeneral Manager of the Hydrocarbons Trade Confederation of the Argentine Republic (SECHA), the chamber that brings together service stations.

With these estimates, When transferred to the final fuel price, the tax hike will have an impact of at least 1.2%.

At present, at what price do refining companies buy a barrel of oil from local producers US$68, whereas if it were to be imported, it would cost US$75. Market leader YPF aims to close the gap between the Creole barrel and the import parity price (what gasoline would cost if it were 100% imported).

According to SETCHA calculations, from last December to today, fuel sales have fallen by 17%. During this period, Fuel prices doubled after sharp devaluation in DecemberWith these increases, The price of petrol and diesel in Argentina was equal to the price of neighboring countriesmaking it less convenient for foreigners to refuel in the local market.

In addition, in recent months, Consumption of premium gasoline fell sharply: Sales fell 22.6%Well above the general average. The volume sold at service stations is distributed on average between 55% gasoline and 45% diesel. (varies depending upon location of outlet).

In recent years, 70% of customers bought the economy variant (Grade 2), while the remaining 30% bought the premium (Grade 3). With the latest price hike, this ratio changed to 80% super and 20% premium.

Despite the fact that the value of pesos at the pump has more than doubled in the past three months, The price of petrol is consistently 7.5% cheaper than the average over the last decade. “Last October, we had gasoline and diesel prices in static terms that were the cheapest they have been in the last 30 or 40 years. By December this was reversed, but fuel prices remain below their historical averages,” he said. Nicolas ArceoDirector of Economy and Energy.

However, the drop in sales was sudden due to a drop in purchasing power. “Between 2010 and 2023, the average salary bought an average of 989 liters of fuel per month. In December, according to the latest official data, the average salary allowed you to buy 735 liters of fuel. The improvement in prices is not so significant in real terms, but it has an impact in terms of the purchasing power of the population“The former Under Secretary for Economic Planning explained.

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