War in Iran would increase deficit by $1.2 trillion in fuel fund, goodbye to gasoline price drop?
Just two months after starting to lower gasoline prices in Colombia, the war in the Middle East widened the gap between international and domestic fuel prices. In fact, it is estimated that this month alone, the Fuel Price Stabilization Fund (FEPC) will accumulate a deficit of $1.2 trillion, which would be a real headache for the Government to continue lowering the price per gallon.
TL;DR
- The war in the Middle East has widened the gap between international and domestic fuel prices in Colombia.
- The Fuel Price Stabilization Fund (FEPC) is projected to accumulate a monthly deficit of $1.2 trillion due to rising oil prices.
- This deficit makes it unsustainable for the Colombian government to continue lowering gasoline prices.
- Previous planned reductions of $500 per gallon in February and March are now at risk.
- If oil prices reach $150 per barrel, the FEPC deficit could surpass $3 trillion monthly, potentially leading to significant price increases for gasoline and diesel.
- Approximately 40% of the gasoline sold in Colombia is imported, making the country vulnerable to international price fluctuations.
- While higher oil prices benefit Colombia as an exporter of crude, they create pressure on domestic fuel pricing policy.