The consumption of super gasoline and its price will fall in 2023, and gas stations are questioning the decisions

The proposed cost of a gallon of super gasoline remains in decline, at least it was so in the last quarter of the year and the same trend compared to the beginning of 2023, while the value of extra and eco-country gasoline, as well as diesel remained frozen since the last uprising of the native population , according to the National Chamber of Petroleum Products Distributors of Ecuador (Camddepe).

Petroecuador announced this Monday, December 11th that the recommended super fuel reference price starting this Tuesday the 12th will be $3.61 per gallon compared to $4.28 last month. In January, the supermarket price was $3.98. The price of extra and ecopaís remains frozen at $2.40 and diesel at $1.75 for the automotive segment.

The price of premium gasoline continues to fall: $3.61 per gallon is what is proposed from December 12, 2023.

The president of Camddepe, Ivo Rosero, recalls that the monthly variation is very directly related to the price of oil, if it rises, the cost will rise and vice versa, but in addition, he indicates that it is decreasing every day, the consumption of this fuel due to the price.

Currently, super has a market share of 1.65%, which the presenter describes as “negligible value”. At the beginning of the year, it was 2%, and in 2014 and 2015, the share of supermarkets was 14% and 15%.

“There is a big difference between the years 2014, 2015 and what is happening today, because currently most vehicles, not only high class ones, all new vehicles need a minimum fuel of 92 octane. So what is happening, that because of the very high price of the supermarket, people do not buy the supermarket, but go to the extra”, he explains.

With this context, Rosero points out that a very important fundamental issue must be considered: Ecuador is, apart from Venezuela, the only country that has subsidies. “We have to be honest in this part, subsidies are not good, because otherwise they never reach the most needy. Even in governments with absolutely socialist overtones, they don’t have fuel subsidies.”

A gallon of super gasoline in Ecuador drops to $4.28 from November 12, 2023.

Annual subsidies would amount to about 7,000 million dollars, says Rosero. “It is a huge, unsustainable value, there was an alternative that switching to targeting was a way for the Government to have resources and not hit those who need it the most”, he comments.

However, he adds that the targeting as it was structured failed due to several technical aspects that they mentioned at the time, but at the same time they proposed a solution that can be implemented, now with the government of President Daniel Noboa, that targeted users simply get a debit card that is , for example, issued by a bank, so that the value of the subsidy is credited to the beneficiary monthly, for example $50, which can be applied immediately. In this way, high technology would not be needed.

Rosero points out that the variation in fuel prices directly affects the fiscal coffers, as it is directly linked to the price of the subsidy, “which has become stronger” and has become more severe since Russia’s invasion of Ukraine. “Oil prices were skyrocketing, so the subsidy amount was getting bigger and bigger, the consumer doesn’t feel it, but the fiscal treasury does,” he explains.

Gas stations have good expectations of the new government, commenting that immediately after assuming the presidency, they sent Nobo two letters requesting a hearing, one with the president and the other with the minister of energy, but they have not yet received an answer.

The letter asks the CEO to address the profit margin and quota issue at 455 gas stations, as losses amount to $12 million a month in diesel sales. “This has been happening since July of this year. So, we are talking about a loss of about 70 million dollars on 455 stations. We hope that at least there will be rationality regarding the quotas, because millions of losses have been created.”

The suggested retail price of super will be $4.37 per gallon, up 4 cents from last month

With the new management, they hope for a solution regarding the correction of the profit margin. “The most serious problem is that they have not adjusted our margin for 21 years and the situation is unsustainable, we earn 16 cents per gallon, for example, in the allowance we share with the dealer and the carrier,” he explains.

For reference, consider that in Colombia that same gallon has a margin of 33 to 35 cents, and in Peru it is 28 cents, so they claim to have half the income compared to neighboring countries.

Rosero also questions that on the last day of the previous government’s mandate, the now former president Guillermo Lasso signed a decree ordering the Agency for the Regulation and Control of Energy and Non-Renewable Natural Resources to issue a regulation removing any restrictions on the creation of new gas stations. “This was never a presidential decree, it was always an agency decree,” he points out.