Fuel prices to skyrocket if the government abolishes price cap in February

There are only 3 weeks left until the 15th of February when the gasoline price cap, introduced last year by the government, will expire. Hence, the government should soon make a decision on whether to extend or end the forced price cap. If they decide to remove it, it will pose a serious risk before the election, writes Forbes.hu.

Oil prices keep rising

Ever since we have started coming out of the lowest point (due to the coronavirus epidemic in March 2020) when the price per barrel was around USD 20, oil prices on the world market have risen sharply. The reason for this is that the supply cannot keep pace with the growing demand because the extraction capacity, labor and transport are limited, said Péter Virovácz, senior analyst at ING Bank to napi.hu.

The deficit economy has been pushing up the prices, including the price of energy. On top of that, we should not forget the geopolitical situation in Russia and Ukraine, which causes significant unrest on the markets as conflict could break out at any time.

90 USD per barrel

According to forecasts, the figures are unlikely to bounce back from current levels. The most likely scenario is that oil prices will rise above USD 90.

In addition, if the price cap is going to end in mid-February, we would certainly have to pay higher prices than the fixed HUF 480 level at the gas stations, Virovácz said.

It seems like a politically logical step to extend the price cap for another three months, as the increase in gasoline prices poses a serious political risk for voters, says Péter Virovácz.