Administrative fuel price caps look unsustainable

HUNGARY - In Brief 20 Mar 2026 by Istvan Racz

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The following is supposed to be an important contribution ahead of next Tuesday's (March 24) Monetary Council meeting, which is scheduled to discuss the Q1 inflation report as well.Effective March 10, the government introduced 'protected retail prices' for the most basic types of fuels, which are in fact administrative price caps, set at HUF595/litre for gasoline, and HUF615/litre for diesel. These prices are, on average, roughly HUF88 (14.5%) lower than the current non-protected retail price would be. More accurately, the latter is the price that the drivers of foreign cars and those who want gasoline to fill up the grass cutters, etc. are indeed required to pay.Specifically for diesel, the most important type of fuel is sold at around HUF700/litre by wholesalers, for the purposes of retail on-sale to non-protected users. For protected users, wholesalers are allowed to charge to retail gas stations exactly the same price as the one retailers are allowed to charge to customers. That means the protected price itself, meaning that wholesalers are bound to make a HUF85/litre loss on that sale. All this also means that on sales like this, retailers can make exactly HUF0/litre gross margin, of which big nothing they are supposed to cover all their costs and profit. Independent small gas stations are bound to be forced out of business by this system.Obviously, wholesalers will not continue for long bringing in fuels under such conditions. Something very similar happened already in 2022, when a similar system was maintained for more than a year's time. MOL, the private and publicly traded big local oil company, whose management stands close to the government politically, trie...