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How do countries keep petrol and oil prices down?

Gasoline and oil prices continuously peaked, causing many countries to find ways to stop the increase by reducing taxes or releasing stockpiles.

The war in Ukraine and the spillover effects of this event have caused the world oil price to skyrocket recently, prompting a series of governments around the world to launch support to ease the financial burden for the people. On May 30, Brent crude oil price rose above 120 USD a barrel after the European Union (EU) announced a ban on importing 90% of Russian oil.

Average gas price in America May 31 also hit a record, with $4.62 a gallon (3.78 liters), up 52% ​​from last year. People in 7 US states are paying at least 5 USD per gallon of gas. Prices in California even go up to more than 6 USD. Inflationary pressures can squeeze consumption very quickly and slow down US growth.

“Gasoline prices often have a big impact on consumer sentiment and are considered a barometer of future inflation,” Jeffrey Roach, an economist at LPL Financial commented in the Washington Post, “Especially in these times of crisis. reopening, travel demand is forecasted to increase sharply, gasoline prices will affect driving plans, and oil prices in general will affect airline tickets.”

US President Joe Biden has repeatedly vowed to find ways to reduce gas prices. This country has discharged its national oil reserves, looking for new sources of supply… but gasoline prices have not been able to cool down. In a Wall Street Journal post on May 31, Biden wrote that the administration needed to mitigate the effects of rising gas prices, and urged the US Congress to approve his proposals for tax cuts and investment in the US economy. clean energy.

An American is pumping gas in Los Angeles.  Photo: Los Angeles Times

An American is pumping gas in Los Angeles. Image: Los Angeles Times

In Koreagasoline prices on May 30 increased to 2,012 won (1.6 USD) per liter, close to the historical peak in 2011. In Seoul, the price of gasoline is 2,088 won per liter, and diesel is 2,066 won.

Fuel tax in Korea has been reduced by 30% from May 1, instead of 20% as planned. Previously, the country only planned to reduce taxes on gasoline, diesel and liquefied petroleum gas (LPG) for 6 months, until the end of April. But then, they had to extend it for another 3 months, until the end of July. also left open the possibility of further tax reduction if prices continue to go up.

With diesel prices surpassing 2,000 won a liter for the first time, the South Korean government earlier this month announced a plan to assist those suffering from increased living costs due to high fuel prices.

Government South Africa on May 31 also announced a series of measures to stop the vertical increase of domestic fuel prices. They extended the petrol tax relief policy currently at 1.5 rand ($0.1) a liter until the beginning of July. The policy was announced in March. The extension will hit South Africa’s budget. loss of 4.5 billion rand (288 million USD).

From June, the country’s Energy Ministry will also eliminate a management tax currently at 0.1 rand a liter, applied to 95 gasoline. It is also proposing to reduce the price of base fuel by 0.03 rand a liter. liters in the coming months.

Even with the new measures in place, however, South Africa said petrol prices will still increase by 2.4 rand a liter from June, while diesel prices will increase by 1.1 rand. Fuel prices in this country are adjusted monthly, according to the world oil price and the rand exchange rate.

In Thailand, in mid-May, Prime Minister Prayut Chan-o-cha announced to extend the reduction of excise tax on diesel by two months, and at the same time increase the reduction. He said that from May 21 to July 20, the consumption tax on B5 diesel oil will be reduced by 5 baht a liter, up from the old level of 3 baht. The previous tax rate was 5.99 baht a liter.

This will cause the Thai budget to lose about 20 billion baht. The National Petroleum Fund will also lose about 70 billion baht.

“Concerning people and manufacturing businesses is essential. The government is doing its best to prevent the retail price of diesel from rising as sharply as the world crude oil price. Otherwise, this will affect the cost of living. activity, consumer prices and transportation,” he said.

He also said that the Thai government is considering providing support to the most affected fuel user groups. The price of standard diesel in Thailand in the middle of last month was nearly 32 baht a liter.

Tax reduction is also the way many states in Canada option to keep fuel prices down. In April, the Ontario government announced a plan to reduce gasoline taxes by more than 5 cents a liter in the last 6 months of the year. In March, the Alberta government also announced that it would not collect fuel tax (currently at 13 cents a liter) if the price of WTI oil is above $ 90. The average price of gasoline in Canada first hit 2 Canadian dollars a liter in the middle of last month.

Still at Netherlands, from April, fuel tax is reduced by 17 cents a liter for gasoline and 11 cents a liter for diesel. VAT on energy is also reduced from 21% to 9%, starting from July. In total, this package will cost the Dutch Ministry of Finance 2.8 billion euros and will be in place for at least 6 months. In this country, taxes account for 50% of the price of gasoline and 40% of the price of diesel.

The one-time subsidy for low-income families has also increased from 200 euros to 800 euros. “The Dutch are getting poorer because the things we buy are expensive,” said Karien Van Gennip, Dutch Minister of Employment and Social Affairs. focus only on low- and middle-income families.”

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