This decision comes at a critical time when, based on preliminary statements, the government would need to act to depress the high fuel costs. Nonetheless, a tax reduction an obvious solution to fuel traders seems unlikely as it would cut into the budget.

The Hungarian government has the flexibility to reduce fuel prices by trimming the taxes, which account for roughly 50% of the product's cost, according to the Independent Petrol Stations Association (FBSZ) President. Otto Grád, the General Secretary of the Hungarian Petroleum Association (MÁSZ), also believes that only through tax reduction can fuel prices be successfully lowered without disrupting market operations.

These discussions arise as the government deliberates on Wednesday whether to intervene in the face of soaring fuel prices in Hungary. Marton Nagy, the Minister for Economic Development, hinted last week at the possibility of reintroducing a price cap, aside from other measures like narrowing profit margins.

Possible government actions include:

- Reinstating a regulated price,

- Reducing fuel traders' profits,

- Lowering any other element of the price structure,

- Or deciding against any intervention.

INSTEAD OF SPECULATION

However, Gábor Egri from FBSZ refrained from speculating on the expected outcomes, emphasizing the importance of awaiting the official announcement in the public gazette. He highlighted the current tense supply situation, suggesting that instead of pressuring petrol stations, the focus should be on assuring them, especially given the geopolitical tensions affecting oil supply routes through Ukraine and the Hormuz Strait.

The efficacy of the price cap in revealing Hungary's self-sufficiency challenges, referencing technical issues at the Százhalombatta refinery and enforced fueling limitations, was also discussed. Egri questioned the reliance on regional data from the Central Statistical Office (KSH), indicating the government's decision might be grounded on experimental methodologies.

While accepting the regional comparative data from MÁSZ, Egri stressed the paramount importance of ensuring Hungary's economy is well-supplied with fuel. Despite the considerable budget deficit, he noted the government's room to maneuver by adjusting the substantial tax component of fuel prices.

Grád echoed the sentiment, highlighting that without causing market disruptions, the government's scope for reducing fuel prices mainly lies in adjusting tax levels, including excise duty, VAT, and removing special taxes, to maintain normal market operations.

WORLD MARKET PRICES SPEAK VOLUMES

Given the favorable turn in global market events, it's anticipated the government may not take action this Wednesday. The expectation is based on recent trends such as the significant drop in crude oil prices and diesel rates in Rotterdam, reflecting a market correction rather than a response to Minister Nagy's statements.

The regional comparison of Hungary's fuel tax rates, although of little consolation to consumers, places Hungary in the mid-field within the region. Detailed reports by Világgazdaság have shed light on the peculiarities of fuel price formation and the intricacies involved.

This development suggests a cautious approach by the Hungarian government, balancing between budget considerations and market stability, as it navigates the challenges of fuel pricing in a volatile global landscape.