How will the government freeze the price of fuel

The government has decided to fix the dollar and Brent crude price variables to freeze gasoline and diesel prices for 90 days from today., as part of the measures announced by President Mauricio Macri to improve the economic situation after the primary elections.

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Official sources explained that, to calculate the freeze in the price of gasoline and diesel fuel over 90 days in the fuel retail segment, a freeze for the same duration of the price of crude oil will be put in place.

This price will be the price that each refinery has in force with its supplier. It was therefore decided to define the variables on the values ​​of August 9th., with the dollar at 45.19 dollars and the barrel of Brent at 59 dollars, this afternoon was explained by the Palacio de Hacienda.

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From this announcement, the energy secretary in charge of Gustavo Lopetegui worked on the design of the resolutions that will provide legal support for the application of the freeze measureand since January 1, 2018, a fuel-free market is in effect.

This measure, adopted under the direction of then Minister Juan José Aranguren, put an end to the so-called Creole barrel, which imposed a reference value for crude oil.

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Oil companies consulted after President Macri's announcement acknowledged "evaluate the government's decision and hoping to see how it will be implemented "but they warned that the measure" is a very bad sign for the climate of investment throughout the fuel value chain ".

In particular, eThe business sector hopes to know on what legal basis the government will force oil companies to fix their prices for 90 days, and his main fear was that he would again appeal to the Supply Act in the event of a possible default due to distortion of market prices.

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In this direction, the sources wondered how companies would be forced to import a good portion of the diesel demanded by the local market at an international price with a dollar to 63 pesos to sell it at 45.19 dollar service stations as the government has determined.

To date, oil companies – particularly YPF, who have set the tone for price updates in recent months – have badyzed the reorganization of the variables that make up the price of gasoline and diesel, including the rise of the dollar since Monday.

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"None of the oil companies facing a crisis like this has acted irresponsibly in recent years. In August, it was decided to postpone this increase until after the elections. and this week, a very moderate increase has been badyzed compared to what is happening, "explained one of the sources of the activity.