Fueling Confusion

THE government has once again implemented a confusing policy to limit the consumption of subsidized fuel. Instead of increasing prices, the government has decided to restrict sales of subsidized fuel at several locations, and is hoping that this will lead to a decline in consumption.

The government's aim is good: it wants to ensure that consumption of subsidized fuel does not exceed the quota in the 2014 State Budget. In June the government and the House of Representatives (DPR) agreed to limit the subsidized fuel quota up to the end of the year to only 46 million kiloliters. However, by the end of July, consumption of subsidized diesel had already reached 9.12 million kiloliters, or around 60 percent of the diesel quota, while for Premium gasoline, the figure was 17 million kiloliters, or approximately 58 percent of its quota. The concern is that if consumption is not limited, stocks of subsidized diesel will run out by the end of November, while supplies of Premium will only last until December 19.

August 12, 2014