Fuel prices rise 9% in Argentina

This is the second rise in the price of basic fuels in less than two months
AFP/EITAN ABRAMOVICH - Los conductores hacen cola para repostar gasolina en Buenos Aires

AFP/EITAN ABRAMOVICH  -   Gas station in Buenos Aires, Argentina

The oil company YPF announced a new 9% increase in fuel prices. The company, controlled by the Argentine government, is the largest producer and distributor of hydrocarbons in the country. This new increase in the sale price is the second increase in recent months. According to company sources, the aim of this increase is to "avoid further widening the price gap that already exists with the competition". Other companies such as Axiona and Raizen, companies owned by the Shell chain, have also joined in this increase over the weekend.

The prices set by the oil company YPF serve as a reference for other private companies in the sector that operate in the national market. "Prior to this increase, it was between 7% and 12% and caused an increase in demand for the YPF network, generating significant product shortages throughout its system and impacting the level of service to all its customers," company sources told elDinero.

PHOTO/JACOB FORD/ODESSA AMERICAN via AP  -   Plataforma petrolífera en Midland, Texas

According to the oil company, the demand for fuels, especially diesel, increased notably during the month of April to reach the "highest demand in history". To the rise in demand must be added the increase in costs associated with refining and marketing, in addition to the increase in local prices of biofuel produced by third parties and sold in price-regulated markets. 

In recent weeks, international fuel prices have risen by up to 30% compared to last year's values. On the other hand, domestic biofuel prices also rose by 30% during the same time period, and are expected to rise by as much as 50% between January and August 2022. These conditions resulted in the company having to incorporate 75% more volume than in March. "After this adjustment, we will continue to monitor the evolution of the variables that affect price formation, the behaviour of competition, always taking into consideration the particularities of the macroeconomic context of the country and the international reality," the company said.  

AP/NATACHA PISARENKO - El presidente de Argentina, Alberto Fernández
AP/NATACHA PISARENKO - Argentina's president, Alberto Fernández

The owners of the oil companies are justifying the sharp price rises with the losses suffered during the pandemic. According to industry sources, the companies have lost the equivalent of 5.5 months of turnover in the last 4 years due to the recession, the pandemic caused by COVID-19 and the uncertainty of the current international context.

The rise in fuel prices has occurred in a context of strong price inflation in the South American country. Prices reached a year-on-year increase of 55.1% and a monthly increase of 6.7%.

On the other hand, different sources in the sector highlighted that while the price of super naphtha increased by 17.5% between June 2021 and March 2022, the prices paid by consumers increased by up to 39.7%, unevenly among products. Food and beverages rose by up to 43.8%, milk by 29.1%, and bread by 45.4%.

America Coordinator: José Antonio Sierra.