Since October of last year, Colombians have seen, month after month, increase the price of a gallon of gasoline. Initially they were increases of 200 pesos, but in the last two months they tripled and were 600 pesos for May and June.
He Finance Minister Ricardo Bonilla, assured that it is very probable that in the future the increases will continue to be of this magnitude. With the rise in June, the country is paying for gasoline that is 3,180 pesos more expensive compared to September 2022.
(Also read: The price of gasoline will rise 600 pesos in Colombia: this is how the gallon will remain)
But why is it going up so much? The root of these increases is in the fiscal gap of 34.2 trillion pesos -to the first quarter of 2021- that the Fuel Price Stabilization Fund (Fepc) has.
The operation of this fund means that Colombians have subsidized gasoline, since the Government, with resources from the General Budget of the Nationassume the differential between the national and international prices, thus allowing a cheaper gallon to be paid.
In the case of not having had the operation of the Fepc, so far in 2023 the price of gasoline would have been more than 4,200 pesos above of the current average sale price per gallon, which in June is 12,364 pesos taking into account the 13 main cities of the country.
(Also read: Gasoline price: Government reviews formula to have differential rates)
Prevent the poorest, through the budget, from paying the gasoline subsidy to those who have their own cars
But in this explanation, President Gustavo Petro went further. He said that these monthly increases are made «to prevent the poorest, through the budget, from pay the gasoline subsidy to those who have their private cars«.
According to the president, the FEPC deficit is so large because in the second half of 2022 necessarily the refining capacity in Colombia and at the same time the international prices of oil and gasoline rose.
Additionally, according to him, the purchase of imported gasoline was never planned, and this was done at the highest international prices.
For this reason, he stated that «this year the purchase of imported gasoline must be planned and take advantage of the fact that its price falls with oil. Thus this year the deficit will stop growing when the domestic price meets the international price«.
This is my great concern of these months and on which we have made decisions.
Why does gasoline go up every month? To prevent the poorest, through the budget, from paying the gasoline subsidy to those who have their own cars.
— Gustavo Petro (@petrogustavo) June 4, 2023
When will gasoline stop rising?
I know that this measure bothers, especially the middle class, we are looking for formulas to make it progressive
President Petro assured that increases in the price of a gallon of gasoline they will stop until the internal price matches the imported onethe increase in the FEPC deficit is closed and the debt can be paid in the following months, gradually reducing the fiscal gap.
This means that there are still several months of increases, so Petro asked for solidarity from consumers. «I know that this measure bothers, especially the middle class, we are looking for formulas to make it progressive and we ask car owners for their solidarity to close a very bad policy that was imposed last year with consequences that we are mitigating,” he added.
According to Julio César Vera, president of the Xua Energy Foundation, currently the differential between the national and international price of gasoline is approximately 2,831 pesos per gallonwhich means that if monthly adjustments of 600 pesos are made -as the Minister of Finance said- in five months the international price would be reached or in seven months if minor adjustments were made, of 400 pesos per gallon.
So this does before Until December of this year, Colombians will have to assume increases in the price of this fuel.
President Petro stated that, once the international price is reached, with a small surplus to pay the debt, the price of gasoline will be allowed to float with the international«That seems to be going down during the end of the year and following months.»
It also requested Ecopetrol that «the international average price at which we import gasoline must be public information.»
(Also read: Be careful! This is how the price of gasoline has increased in recent months)
Gustavo Petro, President of Colombia
What will happen to the price of diesel?
Ecopetrol projections indicate that in June there will be a deficit in the FEPC of 44 trillion pesosof which, 17.17 billion pesos were for gasoline, while the remaining 26.3 billion pesos were not met because the price of diesel has been stable since last February.
President Petro assured that this stability is maintained”to avoid further upward pressure on food prices. These are mostly transported in trucks that use that fuel.»
Although the Government said in 2022 that the increases in the gallon of diesel began in June of this year, the truth is that this month also remained unchanged and remains at an average of 9,065 pesos.
In April the inflation in colombia began to give way and settled at 12.82 percent. If this trend continues, it is expected that the price of a gallon of diesel will also begin to rise very soon.