Here are the causes of the Hungarian fuel crisis

In Hungary, the media has been loud about the petrol price freeze and the petrol shortage. Refuelling is already a serious challenge in Hungary, even though petrol stations are introducing quantitative restrictions. The reasons and possible outcomes are explained in our article below.

Nationwide fuel shortages

The Hungarian government capped the price of fuel at HUF 480 (EUR 1.16) on 15 November 2021. The aim of this decision was to avoid the price of petrol reaching the psychological limit of HUF 500 (EUR 1.21) per litre.

The official price took a huge burden off the shoulders of many citizens who already have difficulties making ends meet due to the ever-rising living costs. However, major fuel importers have pulled out of Hungary as a consequence. This left Mol as a single supplier in entire the domestic market.

Mol bought 85 percent of the Hungarian oil wholesale market in November, index.hu reports. Hungary is providing fuel for the whole country by utilising its own resources, but this can be only maintained if the Friendship pipeline works without problems. In addition, it is important that domestic oil refineries can process the incoming oil.

The Százhalombatta refinery, which is currently operating at 55 percent, is a key part of this process. Furthermore, the Friendship pipeline is not a reliable source, as it has been damaged more than once since the war broke out.

Is the population to blame?

Fuel is cheaper than its market price. Many people profit from this by filling up and storing or reselling. This creates supply problems that put even the largest market player in a difficult situation. There were days when MOL’s wells ran out of fuel 70-100 times.

It is also noticeable that because of cheap prices, Hungarians use their cars more often than before. Customers bought 20-30 percent more petrol and diesel than in the previous year.

Petrol stations are also protesting against the price cap. They are losing money on every litre of oil, and as a result, many of them has been forced to close down, writes hvg.hu.

Read alsoFuel will become 25-30 percent more expensive for a lot of people in Hungary from January 2023

What can we expect?

More and more petrol stations have introduced quantitative restrictions on refuelling. These are not worth it and cannot be circumvented. Without the price cap, the price of 95-litre petrol would currently be HUF 617 (EUR 1.45) and HUF 681 (EUR 1.65) in the case of diesel.

The price cap also jeopardise the security of supply. The fuel price freeze is currently in force until 31 December. Experts say the government would not extend it until 2023.

However, it is not just the affordability but also the supply that pose questions. From 5 February, it will no longer be possible to import products made from Russian oil into the EU. Péter Szijjártó, Minister for Foreign Affairs and Trade, has previously said that “Hungary’s purchase of Russian oil and gas is not a political statement, but a physical reality, as it is the only way to guarantee our country’s supplies at the moment”.

Read alsoPanic at Hungarian gas stations due to fuel supply hoax

Source: index.hu, hvg.hu