The worst-case scenario for Hungarian drivers has become reality. As of today, July 15, fuel prices in Hungary are rising by an amount not seen for a long time. For the TISZA government, this wave of price increases is becoming a major embarrassment.
The news began to leak out yesterday. Today, it has become a bitter reality at petrol stations: wholesale prices for both petrol and diesel have been raised sharply. Motorists should prepare for pump prices to quickly surpass the level of the recently abolished government-regulated “protected price” (price cap).
The wholesalers’ decision did not come out of nowhere—it had in fact been overdue for days, writes Világgazdaság. While international oil markets had already been climbing, Hungarian wholesalers initially kept prices stable. However, that brief respite has now come to an end. The latest escalation in the Middle East has finally caught up with the market.
The price increase is far more than an economic inconvenience—it also carries significant political consequences.
Only a few weeks ago, the law abolishing state-regulated fuel prices came into force. If filling stations now pass the higher wholesale prices directly on to consumers, fuel prices across the country will exceed the former price cap.
According to the fuel price monitoring website holtankoljak.hu, the wholesale price increase is substantial. As of Wednesday, the wholesale price of 95-octane petrol rises by 14 forints (€0.039) per liter including VAT. Based on Tuesday’s national average price of 587 forints (€1.64) per liter, the average pump price is expected to increase to 601 forints (€1.68) per liter.
For diesel, the increase is somewhat smaller at 7 forints (€0.020) per liter, raising the average price from 608 forints (€1.70) to 615 forints (€1.72) per liter.
For petrol, the psychologically important threshold of 600 forints per liter has now been crossed—a level clearly above the former price cap.
Diesel reaches 615 forints per liter, which had previously been set by the former FIDESZ government as the maximum permitted price.
Experts and market analysts attribute the price surge mainly to two factors. Brent crude oil is currently trading above US$86 per barrel, after ending the previous week at a relatively moderate US$75. The main reason is the geopolitical tensions in the Middle East. At the same time, the Hungarian forint has weakened against the US dollar, making crude oil imports more expensive.
Although actual prices vary somewhat from one filling station to another because of market competition, experts believe that prices exceeding the former caps will become virtually nationwide under current market conditions. For the TISZA government, the situation is particularly uncomfortable because fuel prices in Hungary are already higher than the regional average in neighboring countries.
And there is no end in sight. Further wholesale price increases are already being discussed for the coming days.
Attention is now turning to whether the government will invoke a clause in the new law. It allows the Minister for Economy and Energy, István Kapitány, to intervene in fuel pricing by decree in the event of “disproportionate market changes” in order to protect consumers. Given the current pace of developments, that moment may arrive sooner than the new leadership in Budapest would like.
Via MTI, Világgazdaság, holtankoljak.hu; Featured image: MTI/Balogh Zoltán