Hungary scraps fuel price cap in face of shortages

Hungary scraps fuel price cap in face of shortages
Photo: Dawn McDonald - Unsplash

Mediafax – Hungary’s government has abandoned its policy of capping fuel prices after concerns about shortages in supply caused panic across the country and created what the oil and gas group MOL have described as a “critical situation”. 

Gergely Gulyas, the Chief of Staff in Viktor Orban’s government, held a joint briefing with the president and general director of MOL, Zsolt Hernadi on Wednesday, in which he said that removing the price cap “is the only way to ensure security of supply”. The price cap was initially introduced in December 2021, with a maximum price of 480 forints ($1.22) per litre. However, this led to a reduction in the amount of fuel being supplied to Hungary by other countries. 

This situation had become greatly aggravated in recent weeks, with Hernadi explaining that around a quarter of gas stations in Hungary are completely out of stock. In order to resolve this, the government has approved the increase in the price gap up to 640 forint ($1.64) per litre for petrol and 699 forint ($1.79) for diesel.  Hernadi explained that it will take up to two months for imports to be restored and for market stability to return, but that there should also be immediate benefits in terms of reducing shortages within days. 

The MOL President did also acknowledge that by removing the price cap, there would likely be a knock-on increase in inflation. The country is currently facing an inflation rate of over 21%.

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