Is it viable for Colombia to lower fuel consumption?

President Gustavo Petro proposed a new measure yesterday to, in his opinion, boost the economy: cut fuel consumption.

“The economy is doing well, but I want it to go better. On the foreign trade front, it is essential that we reduce fuel imports, especially gasoline. That depends on you, let’s make efforts to consume less gasoline in our daily lives. Start by my caravan presidencyl”, trilled the president on his Twitter account.

(See: Consume less gasoline to help the economy, the call of Petro).

However, this proposal generated various opinions from various experts and unions.

He President of the Center for Economic Studies Anif, Mauricio Santa Maria, He assured that the relationship proposed by the President between reducing fuel consumption and the growth of the economy is not clear. “Gasoline consumption depends on how the economy is doing and the speed of the transition, not the other way around. I really don’t understand,” said Santa María.

On the other hand, Juan Camilo Pardo, economic research analyst at Corficolombiana, He commented that, for now, there is no consensus on whether reducing gasoline consumption has a net effect on economic activity.

(See: Dane: 42.9% drop in external sales of the fuel group).

From one perspective, Pardo points out, andhe increase in gasoline consumption may indicate economic growth and an increase in domestic demand. “When consumers are able to spend more on fuel, they are likely to be able to spend more in other sectors”, he explained.

In addition, he recalled that Colombia is a country that produces oil and gasoline, so higher gasoline consumption can have a positive impact. But on the other hand, explains the economist, “It has been found that there may be cost savings, since gasoline is a finite resource, and its price fluctuates according to various factors. By reducing its consumption, the money spent on fuel can be reduced, and thus people can allocate those extra resources to other tasks, which can boost the economy at an individual or social level”, he explained.

Pardo also commented that, indeed, hethe countryis that they are less dependent on fuel imports are less susceptible to exogenous shocks, and that this could be another reading of the President’s tweet.

(See: Minminas announces that the price of gasoline will increase $600 in June).

A The group that would be directly impacted is the transport and logistics sector. Although the unions agree with the premise of moving towards cleaner energy, they say that it is necessary to analyze the current reality of the country.

“To improve the economy it is not necessary to consume less fuel, it is urgent to review the fuel price formula in Colombia and promote a broad and inclusive debate that takes into account the interests of all sectors involved”, said Nidia Hernández, president of Colfecar, a cargo transport union.

for his part Arnulfo Cuervo, Vice President of Fedetranscarga, said that “it does not make sense to talk about consuming less energy when industry, production, transport and everything that has to do with logistics implies fuel consumption”. Cuervo also said that it is necessary to think about changing the formula for setting prices.

(See: What is the risk for Ecopetrol if the FEPC deficit is not paid?).

Javier Díaz, president of Analdex, said that “What the Colombian economy requires is to increase its exports and obtain the foreign currency to pay for the imports of the products that we do not produce.”.

María Claudia Lacouture, president of AmCham Colombia, commented that “a prosperous economy needs a competitive industry”, and that also goes through processes to substitute fuels, but he said that today the reduction in consumption is seen is in homes with fewer resources, due to price increases.

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