Gábor Egri: Hungary’s safe fuel supply has collapsed

Sold out – we came across the inscriptions stuck on all petrol filling guns at the beginning of the week at a small private well, on our way from Budapest to Csongrád in the middle of the Great Plain. Only Diesel was available at the filling station in the evening, but for some reason we didn’t think it was a very good idea to force it into the petrol car. Finally, we were able to roll to Csongrád, where there was already gasoline at a larger well. But there are problems not only at small gas stations. On Monday morning, on the joint section of the M1-M7, on the exit side from Budapest, you could only buy fuel at the market price, there was no official price gasoline at a larger gas station.

According to industry experts speaking to napi.hu, our experience is unfortunately not unique, and in fact, we can encounter the problem in more and more places, which is starting to become systemic. “The world in which we used to go to any well to refuel and get fuel has ended. So basically, the question is not whether we can expect a drastic shortage of fuel at the domestic wells, since the supply shortage is still serious at the moment,” Gábor Egri, the Association of Independent Gas Stationers president, who also dares to state that the safe fuel supply has collapsed in Hungary. The specialist knows that the supply of fuel is currently limited in 150 smaller Hungarian settlements, while the supply is getting smaller and smaller in major Hungarian cities as well.

Otto Grád, a Hungarian Mineral Oil Association its general secretary also stated that the supply of fuel is quite critical at home. The expert added: in the currently valid regulatory environment, i.e. in addition to the gasoline price cap that has been in place for more than a year, it is no longer possible to ensure the usual everyday fuel supply in the long term.

Experts believe that there can be significant differences in access to gasoline in the country based on the type of settlement and location. The situation is more favorable in larger cities, where the well networks already operate several filling stations at a visible distance from each other. Thus, if the required type of fuel is not available somewhere, it is expected that there will be an alternative within a few kilometers.

Shell and Mol stepped in

At the end of last week, Schell announced that it would introduce strict restrictions on its wells, citing reduced supply capacity in recent days. According to this, you can only buy petrol for a maximum of HUF 20,000 at a time at Shell wells, where the limit for diesel is HUF 50,000. Only a few prominent charging stations, such as those next to the highway, are exempt from the measure.

Recently, Mol has informed the smaller, so-called private wells, which are often family businesses, that they will not be able to provide them with either diesel fuel or gasoline from November 28, Monday, for the sake of the country’s operation and energy security. According to Gábor Egri, the measure may affect 400-500 gas stations in the country.

The restriction of fuel service is a temporary step that only affects wells and retailers that Mol is not obligated to serve. All this was necessary in order to maintain the supply everywhere in the country. Especially after the HUF 480 price cap continues to cause significant domestic demand for fuel, Mol announced on Friday.

Why did you run out of gas today?

Why has the situation in the fuel supply become so critical today? According to Ottó Grád, the story began with the fact that at the beginning of the year there was a significant surplus of consumption, largely due to the excess demand of customers crossing the border, and many people took advantage of the fact that it was much cheaper to refuel in Hungary than in neighboring countries. This excess consumption is still missing from domestic stocks.

This was followed by the summer shutdown and maintenance of the Schwechat and Danube oil refineries. All of this led to the fact that we are still facing a serious stock shortage, the liquidation of which is a rather complex process. Part of this was mitigated by the countries of the region by freeing up strategic stocks, but now they have to be replaced, explains Ottó Grád.

The general secretary of the Hungarian Mineral Oil Association also highlighted that the deadline for refilling the strategic stocks has also been set, which, however, cannot be done at the same time as supplying the market. “However, the situation will only become more critical, because as we know, with the sanctions, the use of Russian pipeline crude oil in the region will be subject to restrictions,” warns Otto Grád.

After this, the specialist sees no other solution: safe supply can only be achieved by reducing consumption, the condition of which is that the government reviews the official price gasoline system. On the one hand, rethinking the range of beneficiaries, and on the other hand, the amount of gasoline and diesel that can be purchased per individual and per vehicle.

A simple economic formula

“It is a simple economic formula that the price of a product listed on the stock exchange cannot be fixed. In other words, even if I do this, it will inevitably cause a shortage. After all, there will be no seller who wants to deal with a product below the market price. It’s no coincidence that the producers who supplied fuel to Hungary until now have been looking for other markets besides us,” argues Gábor Egri.

After this, the president of the Association of Independent Petrol Drivers does not consider it likely that the domestic market will ever return to the state before the price cap period. “For a year, we bathed in the 480 price stop fuel, for which we will not only pay the interest, but the compounded interest in the following years. After a year of smiling, many years of crying will follow,” says Gábor Egri.

Gasoline prices have been wearing the cap for a year now

More than a year ago, from November 15, 2021, the government fixed the gasoline prices per liter for the first time, initially for three months, until February 15, according to the situation at the time. At the same time, it was already clear from the text of the first decree on the gasoline price freeze that the decision-makers considered the extension of the state of emergency for 2022, as well as the gasoline price ceiling.

Prime Minister Viktor Orbán promised another three months of government-priced messages in his annual evaluation speech in February: “in defense of the Hungarian people, as part of the government’s utility reduction policy.” Then they continued this, taking into account world market processes. First, the price cap was extended until May 15, and then the new announcement came in July, when Gergely Gulyás, the minister in charge of the Prime Minister’s Office, said that the government would release part of the strategic fuel reserves.

Official price until December 31

All this took place after MOL’s refinery in Százhalombatta, also known as the Danube, which has been operating since then, was shut down. At that time, the government, while constantly filling up the country’s gas reservoirs, excluded everyone else from the 480 HUF discount, including company cars, except for the public, taxi drivers and agricultural machinery.

In September, another government information revealed that the government will maintain the official price until December 31. At that time, Gergely Gulyás himself admitted that there could be disruptions at the domestic wells, but they are confident that they will be able to maintain the HUF 480 limit. Economic Development Minister Márton Nagy has already stated that it is impossible to maintain price caps indefinitely.

The Prime Minister’s Office replied to ATV over the weekend that from January 1, they can only maintain the gas price freeze under specific conditions. Among other things, if crude oil deliveries from Russia are uninterrupted, parallel to which the refinery in Száchahalombatta also operates continuously. Until then, the government is doing everything to ensure a safe fuel supply.

Source: Napi.hu by www.napi.hu.

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