On Wednesday, May 1st, gasoline and diesel prices in Buenos Aires are set to increase by 4% to 5%. This means that super gasoline prices in the city will surpass $875 per liter. The hike is a result of the monthly devaluation of the peso against the dollar (2%) and the need for refining companies to recoup their margins. The companies involved include YPF, AxionR aízen, Shell, and Trafigura.
Despite the postponement of fuel tax updates until June, the price increase will still take effect. The suspended tax increases, which were originally slated for May, would have resulted in a 3.7% to 7.4% adjustment. Refineries had been able to update their margins between November and January but were asked to moderate increases since February. This has led to prices at the pump falling behind import parity.
Oil companies are purchasing crude oil at $66 per barrel but import parity would require prices closer to $81 per barrel. The delay in price adjustments has resulted in a gap in margins for companies, which has worsened with declining fuel sales. In March, demand for gasoline and diesel fell by 12.1% year-on-year nationally.
Overall, oil companies are working to close the gap between their costs and prices at the pumps in order to maintain their margins and recover from recent sales declines. The complex landscape of Argentina’s oil industry is influenced by various economic factors such as currency devaluations and declining fuel demand.
