“The government oversalted the soup and now he doesn’t like the taste. But instead of adding less salt, he blames the carrot, even though it’s not the reason why the food is salty” – with this analogy László Gépész, the vice-president of the Association of Independent Gas Stations, shows that “the government also taxes the tax, and then imposes a tax on it as well ”, and now pointing to others, he is waiting for the solution to reduce the price of fuel.
A week and a half ago, Minister of Economy Márton Nagy “ordered” the leaders of the Hungarian Mineral Oil Association (MÁSZ) and MOL, to whom he informed them that, in his opinion, the average fuel price is 7-9 percent higher than the regional average, and he “expects” it to drop to this level in our country. also the consumer price of gasoline and diesel. Ten days have passed since then, Vezess asked the actors what motorists can expect at the wells.
The service level of the wells may deteriorate
“MÁSZ accepts the request with reservations,” General Secretary Ottó Grád told us, then reminded us that the current price was established after the changes in January. “The number and size of the tax elements have also changed.” We also wrote several times about the HUF 43 gross per liter increase in the excise tax at the beginning of the year, as well as the three percent additional retail tax imposed on filling station operators.
Currently, the largest quantity of 95 petrol is 650 forints per liter on average, and basic diesel is 647 forints, that is, a 7-9 percent price drop would mean minus 40-60 forints per liter. “There is a very, very minimal amount of profit in the retail distribution of fuel, the information that it would be extra profitable is wrong. There is no such thing at all” – this is what Ottó Grád emphasizes most of the time during our conversation, and that because of this the room for maneuver in retail is minimal.
Does regional comparison provide real information?
Is Austria or Romania closer to Hungary? Slovakia or Serbia? Which has the same standard of living, salaries, tax system, car prices or anything else as ours? The comparison with regional fuel prices raises many questions, because the price per liter of gasoline and diesel sold in these countries includes local taxes, local energy prices and local labor costs.
The world market price of crude oil is almost the same for local distributors (partially the wholesaler may be the same), but compared to countries that use the euro, for example, we are at a disadvantage with our weaker and weaker forint exchange rate. For the price of crude oil, we have to look at the US dollar/forint exchange rate, while in several countries of the region it is the dollar/euro.
Here, the forint exchange rate has weakened a lot compared to the US dollar in the last five years: on April 19, 2019, you had to pay HUF 292.5 for one US dollar, this Friday it was HUF 370.
In response to our question regarding the minimum leeway mentioned by the general secretary, he outlines the reduction of the service level of gas stations. “In retail, even the minimum price reduction requires serious savings, let’s say the wells will be open for a shorter period of time. In this way, you can save on salary costs, because the gas station lays off employees, and since it is open for a shorter period of time, the electricity bill is also lower. However, this reduces the level of service. From here, the motorist rolls in vain after work at the rural well at 6:15 p.m., and will be surprised to find that the well is already closed at 4 p.m. Nowadays, people should not be fired, but their wages should be increased so that they remain on the wells. But it is still impossible to reduce HUF 40-50-60 per liter.”
What is more important to the motorist: a HUF 6-7 price reduction, which is practically 1 percent, or that the well where you go to refuel remains open for 3-4 hours longer? – this question follows from the words of Ottó Grád
Compared to the number of employees, the gas station has no effect on the price of raw materials, the exchange rate, taxes and the price of energy, according to the general secretary of MÁSZ, who claims that in recent decades a world-class network of filling stations has been built and operates in Hungary, whose high quality of service may now be in danger, in his opinion .
The government does not answer, MOL does not answer
Of course, we also contacted the Ministry of National Economy (NGM), which initiated the current water dispute, and sent them the following questions:
- According to NGM’s expectations, when should fuel prices in Hungary fall to the regional average? A month, 3, 6?
- What will the NGM (the minister, the government) do if domestic fuel prices do not fall to the regional average within half a year?
- Why doesn’t the government (and the parliamentary majority that supports the government’s decisions) use the tools it has to achieve price reductions (e.g. VAT reduction, reduction of excise duty, reduction of the tax on gas stations)?
Unfortunately, no answers were received until the publication of our article to the questions sent last Tuesday. In the meantime, KSH launched a graph showing the average price of 95 gasoline in Hungary and in the region on the instructions of the government.
If we look at it, on December 25, 2023, with HUF 3 cheaper our gasoline was (546 forints vs. 549 forints) at the regional average price, but at the time of writing our article (Friday afternoon) more expensive with 20 forints. Which, on the one hand, is not 7-9 percent (which, according to MTI, the minister mentioned)…
…on the other hand, there was a HUF 21 difference already on January 29 (HUF 589 vs. HUF 568), when we could refuel at the Hungarian gas wells at liter prices after the tax increase (Source of both graphs is KSH)
MOL is an interesting player in the development of fuel prices in Hungary, which also affects how much motorists pay for refueling as a retailer that operates filling stations. On the other hand, as a wholesaler, the fuel it originally sold is available at the wells of many, including many rival companies, in almost the entire country, i.e. it has an impact on consumer prices here as well.
You could even tighten your belts on your filling station network and take forints from elsewhere in order to reduce the price of literature. Or, according to the average car user, even with the same quality of service, the company could transfer significant profits to the price of 95 gasoline and diesel, which is obviously much easier to describe here than to implement. However, it cannot be ruled out because the profit is huge. (The MOL Group’s profit before tax in 2023 is 1.936 billion dollars, written in letters and forints: seven hundred and sixteen billion.)
More exciting is MOL’s effect on prices as a wholesaler, only the players really have accurate information about this market. As a newspaper, we asked and asked the oil company:
- Write down what tools MOL, as a wholesaler, has in relation to the wholesale price to reduce the consumer price of fuel sold at filling stations.
- On the other hand, will MOL use the tools related to the wholesale price in the coming months to reduce the domestic price of fuels?
No answers were received to the questions we asked on Thursday last week until the publication of our article.
“The product is temporarily unavailable” sign on November 28, 2022 at the MOL well in Vecsés. The country became aware of the fuel shortage (Image: Getty Images)
The troll of the Hungarian fuel market speaks
How can you sell gasoline so much cheaper than everyone else? What are these unmarked mystery tankers at your wells? Is cheaper fuel really worse? We asked the questions – here are the answers!
Something will happen
“I see that the government is not united in this, Finance Minister Mihály Varga said the truth. According to him, if we remove the taxes from the Hungarian fuel price, without them, the net fuel price is in the middle range in Europe,” quotes another member of the government, László Gépész. We asked the vice president of the Association of Independent Gas Stations that if the ball bounces in the government’s court, he would list the price of a liter of fuel so that motorists could see where they could cut corners.
Obviously, every vehicle owner wants to fill up with cheaper gasoline or diesel, and according to the head of the association, roughly half of the liter goes to the budget.
30,000 HUF is the cost of refueling an average car today
He laughed bitterly at our request. “Once we wrote down everything that is in the literary book, it turned out to be three pages. But I will tell you the most important points.”
World market base price – In addition to global market and political processes, the strength of the currency of the buying countries determines who pays how much. As we mentioned earlier, the forint/dollar exchange rate matters for us. However, the government has a clear influence on the strength (or weakness) of the forint.
Excise tax – “Here, the EU was cited for the increase, but the government raised it twice as much as it should have been raised on time,” says László Gépész.
EQR – Today, this is HUF 8-8.5 per liter in fuel. The long-term goal of the Energy Efficiency Obligation System (EKR), which operates in several countries on the continent, is energy efficiency investments. According to László Gépész, this is “charged on fuel by the government in a completely unique way, there is no such thing anywhere else”.
Inventory fee – For imported fuel at the first distributor, it is HUF 4 per liter.
Retail tax – Three percent, according to the advocate, “the government falsely calls it an extra-profit tax, even though it is not levied on profit, but on sales revenue.”
VAT – The highest general sales tax in Europe at 27 percent will be added to the already taxed amount.
“We pay an additional transaction fee for transfers, we pay for certifications that prove our compliance with technical regulations, this is also included in the literary price, as well as employees, energy and the rest,” lists the vice president of the association. It is clear from his words that they will not reduce the price. Then what will happen? – we ask.
“I prefer not to answer what is expected, but something will happen because elections are approaching. I’m afraid he’ll strike back again. We saw the consequences the last time they intervened, we saw what ended up,” he says, referring to fuel shortages in the country and an unprecedented hunt for gasoline, queues and conflicts at the wells. However, if there is no gasoline, it is worse than cheaper gasoline.
According to the latest news, the government will meet this week and decide something about prices, according to the economy minister, a new fuel price cap is not out of the question.
