Fuel rises in the international market bleed government finances

Fuel prices continue to register increases of more than 100% in the world market, including LPG (liquefied petroleum gas), whose demand has also been growing and reaching a consumption of more than 500 million gallons per year in the country .

According to international reports, only the price of LPG has risen more than 80%, however, the Dominican Republic is among the 15 countries with the lowest LPG prices, due to the fact that the Government assumed so far this year compared to the importers around RD $ 9.1 billion so that fuel increases do not affect the family economy.

LPG consumption
The country consumes approximately 500 million gallons per year, about 11.9 million barrels, which represents about 1.4 million gallons per day. This

It implies that the Dominican State will assume approximately RD $ 53.9 million every day during the next week, thus reducing the burden on the Dominican household budget, as a protection measure for the lower-income sectors.

To mitigate the impact on the pocket of the Dominicans that generate the hikes

of liquefied petroleum gas (LPG) in the international market, President Luis Abinader ordered that he assume for 37 weeks the variation of his costs to maintain a fixed price at RD $ 127.10 per gallon.

This effort, undertaken for most of the year represents for the Government the sum of RD $ 5.155 million in debt with fuel importers.

This action has prevented a gallon of gas from rising this week around RD $ 40, for a sale price of RD $ 167.61 instead of RD $ 129.10 (current price). The measure is executed by the Ministry of Industry, Commerce and MSMEs.

At the beginning of July, the Executive Power decided to freeze the price of gas, the fuel most consumed by households, regardless of the increases in the international market for butane gas and propane gas, the main ones

components of LPG, a measure that was announced by President Abinader and agreed at the Working Group due to the International Price Crisis.

In fact, since the end of last year (December 31, 2020) to date, the price of

Propane gas has almost doubled, increasing by 80%. However, during this same period the price of LPG for final consumers has only increased by 3.6%.

LPG represents an average of 2.8% of the consumption of Dominican households. However, this proportion is higher in the most vulnerable population (the lowest income quintiles), which indicates that the freezing of the price of this product has a greater impact on lower-income households.

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It is the second fuel used in the transportation and storage sector, with an indirect impact on transportation costs for citizens, basic food products and restaurants.

RD sells LPG cheaper
Unlike the country, to mitigate the impact of the price increase on the most vulnerable and unlike other nations in the region, the Dominican Republic is among the 15 countries with the lowest LPG sales prices, according to the Global Petrol platform Prices, which reports the situation of 56 countries.

In Latin America, countries such as Mexico, Colombia and Brazil, it has led some governments to transfer costs to consumers or trading companies and even to contemplate unconventional measures.

While the average price of LPG in the 15 countries considered is estimated at US $ 3.27 per gallon, in this country it is sold for the equivalent of US $ 2.29, as of September 27 of this year.

The countries with the lowest LPG prices are Peru (US $ 2.06), Paraguay (US $ 2.08) and Honduras (US $ 2.24) and at the upper limit is Chile with prices of US $ 2.61 per gallon.

The price of Natural Gas continues to rise
While in Europe, which mainly consumes natural gas, prices are also on the rise due to internal and external conflicts, which is having a special impact on England and Spain, where in the latter the price is at the equivalent of US $ 3.47 per gallon.

The upward trend in international prices of energy commodities (butane, propane and oil prices) has reached critical points in recent weeks as winter begins in temperate countries (which use butane and gasoline to avoid freezing ).

LPG PRICE 80% World market
From last year (December 31, 2020) to date, the price of propane gas has almost doubled, increasing by 80%.

3.6% Increase in DR
Since the end of last year, December 31, 2020, the price of LPG for final consumers has only increased by 3.6%.

$ 127 Fixed price
For 37 weeks, with the variation in its costs, the Dominican Government decided to maintain a fixed price of RD $ 127.10 per gallon in the local market, despite the increases in the international market.


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