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Fuel price cap scheme narrowed down

August 3rd, 2022

An investment banker thinks that fuel consumption is unlikely to recede as long as most Hungarians still have access to cheap petrol.

After MOL, the Hungarian oil and gas multinational had warned about the possibility of fuel shortages, the government has limited subsidized automobile fuel to privately owned, Hungarian registered cars, taxis and agricultural machinery. Vehicles owned by companies and entrepreneurs will need to buy fuel at market prices.

On Hold blog, investment banker Viktor Zsiday fears that the newly announced restrictions will not significantly reduce fuel consumption as non-business registered cars still can still buy subsidized diesel fuel and petrol. Entrepreneurs and corporations will have no choice but to purchase more expensive fuel and therefore higher prices will boost inflation further, Zsiday adds. He goes on to claim that in the long run, the price cap scheme may lead to shortages. Instead of a blanket subsidy, the government should offer targeted help to those who cannot afford market price fuel, Zsiday suggests.

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