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🇪🇨 Ecuador /Economy & Trade

Ecuador's new gasoline price formula sparks debate on stability

From El Comercio · () Spanish

Translated from Spanish, summarized and contextualized by DistantNews.

At a glance

News Named sources New plan
  • Ecuador's government has introduced a new formula for gasoline pricing, reducing prices by 5 cents per gallon for July.
  • The reform aims to lessen the impact of international price volatility on consumers, but distributors question its long-term stability.
  • Officials state the existing band system remains, with the new calculation addressing consecutive price increases.

Ecuador's government has implemented a reform to its gasoline pricing system, announcing a 5-cent per gallon reduction for July. This move aims to shield consumers from the fluctuations of international oil prices. However, questions linger about whether this new formula will ensure lasting price stability or merely postpone further increases.

The band method remains. The exceptionality of not allowing it to rise for three months in a row applies this month because it would be the third month.

— Juan Carlos BlumMinister of Environment and Energy, explaining the reform does not replace the band system.

Energy Minister Juan Carlos Blum explained that the reform does not abolish the existing band system for fuel prices. Instead, it introduces a recalculation mechanism triggered by two consecutive increases at the maximum allowed limit. "The band method remains. The exceptionality of not allowing it to rise for three months in a row applies this month because it would be the third month," Blum stated.

If the fuel internationally decreases, we ensure that the fuel for national use also decreases for the benefit of families.

— Eduardo RacinesVice Minister of Hydrocarbons, on the objective of reducing price differences.

Vice Minister of Hydrocarbons Eduardo Racines echoed this, emphasizing the goal of narrowing the gap between international and domestic prices during periods of significant market shifts. "If the fuel internationally decreases, we ensure that the fuel for national use also decreases for the benefit of families," he said.

It was an ad hoc decree so that there would not be a fifth consecutive month at the top of the band.

— Ivo RoseroPresident of Camddepe, interpreting the government's decision.

Despite government assurances, Ivo Rosero, president of the National Chamber of Petroleum Derivatives Distributors of Ecuador (Camddepe), expressed skepticism. He argued that the reform, outlined in Executive Decree 444, was not designed for permanent stability but rather as an ad hoc measure to address the specific situation of avoiding a fifth consecutive month of hitting the band's ceiling. Rosero believes the price reduction this month "cushioned the blow" but does not prevent future adjustments based on market conditions.

This does not postpone anything. It cushioned the blow this month.

— Ivo RoseroPresident of Camddepe, on whether the reduction delays future increases.
DistantNews Editorial

Originally published by El Comercio in Spanish. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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