These Central American countries froze fuel prices

Fuel prices have fluctuated substantially throughout 2022. The barrel price in New York opened the year at US$75.21 and closed yesterday at US$88.87 -an accumulated increase of 18.8%- and reached US$130 and US$123 in March and June, respectively.

To avoid the upheaval in consumers’ pockets, the governments of the Central American region and the Dominican Republic resorted to measures such as price freezes.

Most countries implemented them between March and April; some have extended them to the remainder of the year.

These countries have kept prices fixed to date, from the lowest to the highest regular gasoline prices: Panama, El Salvador, Dominican Republic, and Nicaragua.

PANAMA

Regular gasoline: US$3.25

Until January 15, 2023, Panamanians can fill their tanks with fuel at established prices: a gallon of regular gasoline and diesel will cost US$3.25.

The Panamanian Presidency approved the measure in June, and it was initially scheduled to end on October 18, but an extension enabled it until January 15, 2023.

How much does the country spend? The government authorized some US$320 million to finance the price freeze in Panama.

Over market prices, Panamanians are saving 16.8% on 91-octane gasoline; 21.1% on 95-octane; and 23.5% on diesel, in figures as of the end of October.

“This subsidy represents a fiscal effort for the State amid the austerity measures adopted as a consequence of the war between Russia and Ukraine, and an additional boost to continue with the economic reactivation,” argued the Presidency of Panama.

EL SALVADOR

Regular gasoline: US$4.15

With the chimes to welcome the New Year 2023, fuel prices should be released again.

In the meantime, prices are set at US$4.15 for regular gasoline, US$4.31 for premium gasoline, and US$4.14 for diesel, all in gallons.

Salvadorans save between 3% and 4% on the market price of gasoline, and around 13.5% on diesel, in figures up to mid-October.

El Salvador defined maximum fuel prices as of April 5, 2022, as part of a broader program to contain inflation.

Nayib Bukele’s government had planned to end the scheme on October 20 but decided to extend it until December 31, 2022.

“Even to date, we continue to see increases in fuel prices; we see that oil production projections have been reduced,” argued the Minister of Economy, María Luisa Hayem.

According to the Ministry of Finance, fuel price stabilization costs the country some US$50 million per month.

NICARAGUA

Regular gasoline: US$5.01

Nicaraguans have had frozen fuel prices since April 9 of this year.

Regular gasoline costs around US$5.01 per gallon, and premium gasoline is around US$5.13, according to prices from the National Energy Institute.

Diesel is around US$4.53 per gallon. In this matter, Costa Rica has the highest in the region, with US$5.30.

In a presentation before the National Assembly, José Antonio Castañeda, director of the Nicaraguan Energy Institute (INE), analyzed that since August, oil prices have stabilized, but derivatives remain volatile.

“We are not rich, but we have frozen prices to benefit the economy. Large oil producers such as Brazil, the United States, and Mexico have higher prices than those we have today in Nicaragua in gasoline and diesel,” Castañeda defended.

DOMINICAN REPUBLIC

Regular gasoline: US$5.05

The Dominican government has applied an “extraordinary subsidy” since March of this year, which operates when the price of a barrel of oil is above US$85 and below US$115.

According to the scheme announced by President Luis Abinader, when the quotation exceeds US$115, domestic prices are recharged, but the ad-valorem tax is not included in the calculation.

This partial freezing scheme offers the Dominican Republic higher prices than most Central American countries.

To date, a gallon of premium and regular gasoline are worth DOP 293.6 and DOP 274.5, equivalent to about US$5.40 and US$5.05, respectively.

A gallon of premium diesel costs DOP 241.1 (US$4.46), and regular diesel costs DOP 221.6 (US$4.07), according to the prices established by the Ministry of Industry, Commerce, and Mipymes.

Prices are established weekly. From October 29 to November 4, the Dominican Republic spent DOP 500 million (US$9.3 million) to finance the measure.

The provision cost the Dominican government more than US$32 million in the first week of June when the barrel averaged US$119.15 and accumulated a 50.1% price increase.

WHAT ABOUT COUNTRIES WITHOUT PRICE FIXING?

Among the countries without frozen prices or with partial subsidies to date, prices vary as follows, always in order from cheapest to most expensive in regular gasoline:

HONDURAS

Regular gasoline: US$4.18

As of October 24, the Ministry of Energy will implement a 50% subsidy on diesel increases for the second time for four weeks.

In this country, a gallon of regular gasoline costs about US$4.18, premium gasoline costs US$4.64, and diesel costs US$4.60, in prices for the capital city, Tegucigalpa.

From March 15 to June 26, the government had already applied a 50% relief to diesel increases, which cost close to US$4.4 million.

Xiomara Castro’s government also kept the regular gasoline and diesel prices frozen for four weeks, from June 27 to July 24, at around US$5.15.

Honduras continues to apply a reduction of 10 lempiras (US$0.40) in the tax on gasoline and diesel, a measure that required resources of US$145.4 million from the State between February and September.

GUATEMALA

Regular gasoline: US$4.63

Guatemala is experiencing fuel price volatility, as it has opted to keep prices free.

The Ministry of Energy and Mines constantly monitors fuel outlets, but by law, it cannot fix the amount of fuel sold.

One behavior that calls attention is that diesel has higher prices than gasoline.

At the end of October, average prices were GTQ 41.25 (US$5.27) for diesel, while regular gasoline was worth GTQ 36.27 (US$4.63) and premium gasoline, GTQ 37.17 (US$4.75).

Alberto Pimentel Mata, head of the Ministry of Energy and Mines (MEM), confirmed in Congress that there is a technical group formed by the Ministry of Finance (Minfin), the Superintendence of Tax Administration (SAT), and the Bank of Guatemala (Banguat) to study potential new subsidies.

COSTA RICA

Regular gasoline: US$4.96

In its most recent adjustment, effective as of November 1, the Public Services Regulatory Authority (Aresep) defined slight fuel increases, between 0.23% and 0.59%.

A gallon of regular gasoline is around US$4.96, special gasoline is US$5.21, while diesel remains at US$5.30. In this country, the product is traded in liters.

Costa Rica does not control fuel prices and depends entirely on fuel imports; however, in June, the Legislative Assembly approved freezing the Selective Fuel Tax for six months.

With information from Bloomberg