War on fuel prices in Hungary. The government gives an ultimatum…

As a reaction to the still high fuel prices on the local market, Hungarian Economy Minister Marton Nagy announced that the government has decided to give market players a two-week ultimatum for voluntary price reductions. If this does not work, fuel prices will be regulated again.

Prices must return to the regional average, otherwise the Hungarian government will intervene, he emphasized, according to Portfolio.

Mainly, in the case of two prices, gasoline 95 and diesel, it must be imposed that the prices return to the regional average, Nagy declared. A positive evolution has already occurred, but fuel prices are still above the regional average, he emphasized.

Nagy recalled that the government and the industry association MASZ have already concluded an agreement to ensure that local fuel prices will not be higher than the regional average. The minister summoned the representatives of the association to his office almost two weeks ago, notes Hungary Today.

During the meeting, he announced that the country’s central statistical office will establish a public system for monitoring fuel prices, regularly presenting price differences.

The first presentation, made last week, clearly indicated that the players in the industry have adapted, MOL, for example, reducing fuel prices several times. However, the government has found that this positive development is not enough, urging all fuel retailers to return to regional prices as soon as possible to protect families.

Recently, in response to a question about why there must be pressure on fuel prices and why the government does not allow the market to set them, the Hungarian minister pointed out that fuel prices do not only follow Ural crude oil prices.

“There is an element of profit and many other elements. When we negotiate, we take into account all these factors, including profit margins. We analyze whether they are justified and how they evolve in other neighboring countries”.

For retailers, the reduction in fuel prices desired by the government represents a considerable challenge, according to Daily News Hungary. Although measures such as a shorter operating schedule and layoffs could help reduce costs, the realization of substantial price reductions seems unlikely.

The government is criticized for overtaxing fuels and then blaming other factors when trying to solve the problem of high prices. Hungarian taxes are not the cause of high fuel prices, Hungarian Finance Minister Mihaly Varga countered.

Otto Grad, general secretary of MASZ, declared himself reserved regarding the reduction of fuel prices despite the pressures in this regard. He pointed out that there is only a minimal profit margin in the sector despite the accusations of extra profits. He also warned that any reduction in prices will have an impact on the quality of services.

As for price capping, the previous experience in this regard is a painful one, writes Portfolio.

The Orban cabinet capped fuel prices in 2022, before the elections, and withdrew the measure in December 2022. This was after even Mol had warned that the country was at risk of running out of fuel, and long queues at gas stations had become commonplace in Hungary.