Reason Why Capped Fuel Price Now Limited to Privately-Owned Vehicles in Hungary

  • 1 Aug 2022 11:15 AM
  • Hungary Matters
Reason Why Capped Fuel Price Now Limited to Privately-Owned Vehicles in Hungary
Hungary's government has decided to restrict the fuel price cap of 480 forints (EUR 1.19) per litre to privately-owned vehicles, farm machinery, tractors and taxis, at the recommendation of oil and gas company MOL, the prime minister's chief of staff said on Saturday.

Gergely Gulyás told a regular press briefing that MOL’s main refinery in Százhalombatta, near Budapest, which covers 100% of Hungary’s fuel needs and refines Russian crude, has had to be shut down for maintenance work.

Hungary will now have to source its fuel supply from imports and by freeing up one quarter of the country’s strategic reserves, he said.

Whether a vehicle is eligible for the capped fuel price will be determined based on the barcode on its registration licence, he said.

As hitherto, the market price applies in the case of vehicles of over 7.5 tonnes with Hungarian license plates and vehicles with foreign license plates, as well as fuel cans.

Gulyás noted the war in Ukraine and the related sanctions had buckled Europe’s energy supplies, with the price of crude and natural gas skyrocketing.

There are no guarantees, he added, that crude deliveries would be continuous in the autumn and winter, so releasing the entire strategic reserves was off-limits, and only as much as there is a “real chance” of replacing in the next six to nine months could be freed.

Reserves to Be Complemented with Import

The quarter of strategic crude reserves and MOL reserves would only satisfy a portion of domestic needs, so the rest must be covered by expensive imports, Gergely Gulyás, the prime minister’s chief of staff, told a regular press briefing on Saturday.

From December, refined diesel cannot be imported from Russia since it is covered by the EU embargo, he noted. Remaining reserves are only sufficient for residential consumption, he added.

Gulyás said the Hungarian Petroleum Association on July 27 told the government that imports had dropped significantly, and he mentioned high prices and problems with Austria’s Schwechat refinery which hampered procurement.

Low water levels along the River Danube is also constricting the imports of fuel by barge, he added. It is not known how long the Százhalombatta refinery will be shut down, Gulyás said, explaining that restarting the plant was a complicated process prone to errors, but MOL was keeping the government informed of progress.

Fully 155 kilotonnes of diesel — 184 million liters — will be released in August, he said, 38% of strategic diesel reserves.

Meanwhile, the PM’s chief of staff said it would be clear that Europe is switching to a wartime economy if the European Union declares an energy emergency. Gulyás said such an eventuality would unmask the bad faith of politicians who have claimed that the war would have no effect on Europe.

Such a crisis would present difficulties for households and could push the European economy into recession, he said.

Gulyás noted that Hungary did not vote for the EU mandate to reduce gas consumption by 15% but the country would be forced to comply with it nonetheless. This, he added, was achievable.

All opportunities for replacing gas should be considered for implementation in both the short and long run, he said. “It’s definitely worth escaping from [reliance on] gas.”

Gulyás said prices above 200 US dollars per barrel would severely dent Europe’s competitiveness globally, while signs of a swift end to the war in Ukraine were few and far between.

He said Hungary’s government body for handling the energy emergency was drawing up measures such as increasing lignite production and restarting the mothballed blocks of the Mátra Power Plant.

The government has decreed that firewood can only be taken out of the country with a permit, and forestry managers have been ordered to increase production.

MTI Photo: Tibor Illyés

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