[Economics] How convenient is it to sell gasoline at differential prices?

[#Wittels-]

The Minister of Mines and Energy, Irene Vélez, stated that the Government is studying this measure given the high cost of the fuel tariff.

This Sunday, after finishing the meetings of the Colombian Government on its tour of Portugal, the Minister of Mines and Energy, Irene Vélez, stated that the methodology with which the price of gasoline in Colombia is set will be reviewed, because "the way in the one that is built means that all gasoline is valued at the international price.”

 

In addition, the official said that differential fuel prices are contemplated so as not to subsidize large consumers.

According to Minister Vélez, technical tables have already been set up with the Ministry of Finance and Ecopetrol, to carry out a comprehensive review in search of reducing the cost of fuel in the country.

However, several experts have expressed their concern about this measure, which would be inconvenient, since it would bring more serious problems such as diversion and smuggling.

In addition, they will warn that creating a differential rate in the price of gasoline would mean, in practice, a tax sacrifice.

(Minister of Mines announces measures due to high gasoline prices).

"Setting a gasoline price lower than the international one is equivalent to sacrificing tax collection and is inconsistent with the environmental sustainability agenda. It makes no sense to subsidize the consumption of a fossil fuel," said Luis Fernando Mejía, director of Fedesarrollo, after the announcement. from the minister

For his part, Tomás Gónzalez, former Minister of Mines and Energy and director of the Regional Center for Energy Studies, said that selling the same gasoline at different prices could stimulate smuggling as currently occurs in the border area, with multiple economic and social consequences.

He adds that although raising the price of gasoline is unpo[CENSORED]r, it is necessary to do so "because we are spending too much money on fuel subsidies, money that we need for much more urgent social issues," González said in an interview on Caracol Radio.

The proposal put forward by Minister Vélez to change the gasoline formula does not ring a bell either for former Finance Minister José Antonio Ocampo, since this would simply bring less profits to Ecopetrol.

Likewise, the Minister of Finance Ricardo Bonilla maintained that the proposals on gasoline prices should revolve around three items: maintaining the country's fiscal sustainability, maintaining the income received from Ecopetrol, and sustaining Ecopetrol's financial stability.

Given this, he asked for calm and that the proposals be evaluated under the three aforementioned criteria.

"It is necessary that we evaluate, between the Ministry of Mines, the Ministry of Finance, Ecopetrol and the Fiscal Rule Commission, the composition of fuel prices and how the subsidies are characterized (...) The objective is that we make technical tables and that several proposals come out of there to see how appropriate they can be implemented,” said Bonilla.

 

Link: https://www.portafolio.co/economia/que-tan-convenientes-es-vender-gasolina-a-precios-diferenciales-582532