‘Fuel prices respond to political issues’: Corficolombiana
The Government announced a $500 per gallon reduction in gasoline. Photo: iStock
TL;DR
- Corficolombiana's study highlights limits on government gasoline price reductions due to the FEPC's historical deficit.
- The FEPC has accumulated a $85 trillion deficit between 2016 and 2025, with $68 trillion from 2022-2025.
- Recent price adjustments and lower international prices have created a FEPC surplus, but political decisions have often overridden the established pricing formula.
- Following the formula could have saved $28 trillion in FEPC deficit between 2016-2025.
- A $500 gasoline price reduction, while marginally disinflationary, will cost approximately $940 billion and reduce the FEPC surplus.
- Future governments must decide between a technical pricing rule or eliminating the FEPC.
- Lower international oil prices ($60 Brent) significantly reduce pressure on the FEPC.