Imported gasoline: is it possible that it is cheaper than the country’s? – Sectors – Economy

President Gustavo Petro has put on the table the possibility that the country could buy gasoline abroad at a cheaper price to prevent the deficit of the Fuel Price Stabilization Fund (FEPC) from continuing to grow.

«This year you should plan the purchase of imported gasoline and take advantage of its low price with oil. This way the deficit will stop growing when the domestic price meets the international one,” the president said on Twitter.

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import gasoline it is not a new topic; in fact, 27 percent of the liquid fuels consumed in Colombia last year were brought from abroad.

This situation occurs because the refining capacity in the country is limited. The only two large refineries are the one in Barrancabermeja and Cartagena. It is there that the crude oil that arrives from the fields is transformed into value-added products.

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But can it be achieved that the international price can become cheaper than the one being paid in Colombia?

“It is unlikely that the cost of gasoline prices will go down significantly. The distance between the international price and what is being paid in Colombia can go between 4,600 and up to 6,000 pesosdepending on the month,” said Javeriana University professor Camilo Prieto.

In addition to this, he recalled that imported gasoline has a greater environmental impact since it brings the demand for energy and more CO2 emissions than what is produced in the country.

The former Minister of Mines and Energy, Amylkar Acosta, is more blunt and says that it is «impossible» for imported gasoline to be cheaper than that refined by Ecopetrol in Barrancabermeja (225,000 bbls. / day of crude) and Reficar (200,000 bbls. / day).

«Producer Income (IP), from the fuel price formula, which is what Ecopetrol is paid is the import parity price, taking as a reference the price of fuels on the Gulf Coast of the United States. So the IP is the same, regardless of whether it is refined by Ecopetrol or imported,» explains Acosta.

Tomás González, former Minister of Mines and Energy, says that it is necessary to differentiate between the price paid to Ecopetrol and the price charged to consumers in Colombia.

The first is the market price—the price you would receive if, instead of selling in Colombia, you exported to the Gulf of Mexico, which is your natural market, and it corresponds to the price in the Gulf minus the costs of transporting it there because Ecopetrol gives us the gasoline here in the country.

The second is calculated with the current formula that seeks to smooth out the variations in the international price, which are many, so that consumers in Colombia are not so affected.

«The gasoline that is imported should be more expensive than what Ecopetrol is paid because it includes the costs of transporting it from the Gulf to here,» he says.

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Fall of internal refining?

Specifically, what Petro said is that he is concerned that in the second half of last year there was a substantial drop in domestic refining, which in turn led to a substantial increase in imports, just when international prices were the highest. «That originated a deficit that could reach more than 50 billion pesos this year,» he said.

However, the expert Sergio Cabrales assured that according to the data from the drop in oil, nothing substantial was produced in internal refining. «The production of refined products from the Barrancabermeja and Cartagena Refineries went from 350,993 barrels per day in 2021 to 356,779 BPD in 2022, which represents an increase of 1.6 percent,» he explains.

Is it expensive to buy?

What the President said is that the purchase of imported gasoline and, therefore, this is being done at the highest international prices. «There were no auctions and they ended up buying the most expensive one with the same quality in the foreign market,» he said.

With those words, according to what the minister told Blu Radio, what Petro is requesting is that ecopetrol have more planning mechanisms and future purchases of gasoline so that it is not so expensive and thus the deficit can be reduced more quickly.

“Ecopetrol buys gasoline per day and not in the future. You have to try to import gasoline at a cheaper price with purchasing mechanisms,” said Bonilla.

This medium asked Ecopetrol about the criticism received of its purchasing policy, but the company said that it will not comment at the moment.

How much is the deficit?

The reality is that the Government continues with its policy to reduce the FEPC tax gap and that 26.3 billion pesos are still owed.

For this reason, in June another 600 pesos a gallon nationwide of gasoline; however, diesel remained stable.

«These measures are intended to reduce the significant fiscal impact on the national government of the dynamics of international prices of refined products, against which local prices present a significant gap,» said the Treasury portfolio.

By June 2023, the average retail price of gasoline in the 13 main cities of Colombia already stands at 12,364 pesos per gallon.

Villavicencio continues to have the most expensive gallon, with a price of 12,873 pesos. Then Cali appears, where it can be obtained at 12,797 pesos; in Bogotá it will have a value of 12,773 pesos and in Medellín it will be 12,706 pesos.

Meanwhile, the average retail price of the ACPM nationwide remains at 9,065 pesos.

«In the case of not having had the operation of the FEPC, so far in 2023, the price of current motor gasoline would have been, on average, more than 4,200 pesos above the current average sale price per gallon and in diesel in more than 8,100 pesos”, he said.

According to Petro, the increases would continue until domestic prices coincide with imported prices, closing the deficit increase and the debt could be paid in the following months, gradually reducing the deficit.