New fuel price cap on horizon in Hungary? Brutal fuel shortages could be coming

The Hungarian government does not categorically rule out reintroducing a fuel price freeze if gasoline prices from Ukraine continue to rise. Experts agreed that this would be a particularly bad idea. It would lead petrol shortage within weeks, as it was last seen at the end of 2022.

Nine months ago, Chancellery Minister Gergely Gulyás and MOL CEO Zsolt Hernádi announced that the 14-month-long gasoline price freeze would end the following day. The price of HUF 480 (EUR 1.23) per litre applied to hardly anyone at the time. Since the end of the summer, it had not even been available for company cars or agricultural machinery. Pénzcentrum asked experts and key players in the market about the future possibilities.

Can fuel price caps be introduced again?

The Minister for Economic Development convened with industry representatives to debate the government’s plans on the cost of fuel and how to proceed following the steep increase. If the rise of fuel costs due to transit fares is considerable enough, the government shall step in, and he did not outright reject the idea of a petrol price freeze.

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Ottó Grád, Secretary General of the Hungarian Petroleum Association, said negotiations to reintroduce the gasoline price freeze are underway. He completely rejects any form of introduction and advocates for a different approach. However, it is not yet clear what the most suitable strategy would be for everyone.

“It was disclosed during the meeting that the government is considering reintroducing the gasoline price freeze, but I cannot provide further information. The Hungarian Petroleum Association aims to prevent this reintroduction, and we are exerting all possible efforts toward that end. We aim to find the best possible solution that benefits the economy, the oil industry, and consumers as a whole, but the details are yet to be determined.

I am pleased to report that the current petrol prices are stable, with both 95 petrol and diesel prices remaining unchanged. In fact, the price of 95 petrol even decreased slightly today. Thus, I trust that prices will not reach a point in the next few weeks or months which would require the government to consider implementing a fuel price freeze,” the Secretary General said.

Possible petrol shortage

If the government were to reintroduce a price freeze on petrol, importers predict there will be a petrol shortage within two weeks. However, I doubt the government will make this move, as they are well aware of the drawbacks. The cost of gasoline and diesel is currently at a standstill, potentially due to the decrease in worldwide prices. It is uncertain if this trend will persist in the long run,

Eszter Bujdos, the managing director of Holtankoljak.hu, said.

At the same time, MOL does not think it is time for a gasoline price freeze again. The oil company’s managing director, György Bacsa, told the Della podcast that consumers would feel the negative effects.

Both market players and consumers have become accustomed to the introduction of a fuel price freeze as a last resort, which the government will take. Maintaining an official price regime also threatens the security of supply and stability. Fuel prices are shaped by global trends, both regionally and on the world market. However, the domestic storage capacity system cannot withstand a gasoline price freeze because it upsets the distribution,

György Bacsa said.