After the second consecutive increase of $600 of the price of a gallon of gasoline, President Gustavo Petro affirmed that this dynamic would continue until reaching international parity prices for this fuel.
(See: Why Experts Recommend Gas Prices Keep Going Up.)
Once this point has been reached, the president indicated that savings would be sought and henceforth the price of this energy would be allowed to float according to international prices.
To generate savings in the Fuel Price Stabilization Fund (FEPC)as the president proposes, implies that the gallons are above market values for a while, in order to generate positive balances.
Likewise, leaving a floating price can imply two actions. Either dismantle the Fepc or set a price band, which allows the Fund to be activated only at very high or very low moments in the price of oil.
The objective is to reduce the amount of the subsidy that is being generated. In fact, in 2022, the total debt generated by this Fund was $36.7 trillion and of this $26.3 trillion is still owed.
(See: The reasons why gasoline in Colombia does not stop rising).
According to Ricardo Bonilla, Minister of Finance, this can put the Nation’s resources at risk that could be used for social programs on topics such as early childhood, education, health and the elderly.
For this reason, through his Twitter account, President Petro stated that “once we reach the international price, with a small surplus to pay the debt generated, we will let gasoline prices float with the international ones, which seem to be going down during the end of the year and following months”.
In accordance with Julio César Vera, president of Xua Energyit takes about $2,840 to which taxes are added, that is, $3,200 in total, to equate the international price of gasoline.
On this data it agrees Andrés Velasco, technical director of the Autonomous Committee of the Fiscal Rule (Carf). Experts point out that with the rate of increases that have been seen it is possible to reach international parity this year.
This would yield two benefits. On the one hand, resources could be allocated to other uses. So far, the increases have made the FEPC deficit expectations drop by $14 trillion, according to data from the Carf.
In fact, with the latest increase, savings of $3.7 billion are generated daily, explains Velasco.
“When the gap is closed, the adjustment methodology must be reviewed so as not to reach these debt levels again”, he added.
However, in the case of Acpm the situation is different. “We did not raise diesel to avoid further upward pressure on the price of food”, affirmed the president on his Twitter account.
(See: Why Experts Recommend Gas Prices Keep Going Up.)
That is why the average for this fuel remains at $9,065 and no adjustment has been made to it. Therefore, according to the CARF, the difference with the parity price is greater than $9,000. This means that the State puts almost 50% of the value of a gallon- According to Vera, it is important to start a path of moderate increases, to reduce the $1.2 trillion deficit that are caused each month by this fuel.
All this leads the experts to explain that it is important to start and, according to Velasco, the evolution of inflation must be evaluated so as not to negatively impact the cost of living of citizens.
“Ideally, it should be a few, very gradual and responding to inflation, but start as soon as possible”, he explained.
For his part, Vera pointed out that the transportation sector has to understand that it is a global phenomenon of high oil prices that is meaning that the government allocates a significant amount of resources to attend to this subsidy.
The resources that are avoided to pay the Fund could be focused better in other social programs, Velasco said.
He added that during the second semester of the year the Committee will meet with members of the Government to review the methodology with which prices are established.
He explained that they will present proposals to make changes in how prices are defined fuels and thus correct what is considered necessary.
(See: This is the cleanest gasoline that San Andrés will have since July).
DANIELA MORALES SOLER
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