Chile forecasts fifth consecutive fuel price increase — The Rio Times

Fuel prices may rise in Chile on October 22: economists forecast that gasoline will increase by about 41 pesos per liter and diesel fuel by 90 pesos per liter. The state-owned oil company ENAP is expected to publish its final calculations on October 21, so the projected figures are not yet official.

According to The Rio Times, if the forecast proves correct, this will be the fifth consecutive increase in gasoline and diesel fuel prices since late July. The previous adjustment took effect on October 1: the price of 93-octane gasoline then rose by 39.4 pesos per liter, while diesel fuel increased by 95 pesos.

Impact on prices

Chile imports a significant share of its fuel, so domestic prices are affected by oil quotations on the global market and the peso-to-dollar exchange rate. According to the Economic Observatory of Diego Portales University, the price of Brent crude rose from $102 to $105.8 per barrel this week. On Friday, October 16, Brent closed at $109.86 per barrel.

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The average exchange rate of the Chilean peso was 982 pesos per dollar, compared with 978.3 pesos a week earlier. The weakening of the national currency increases the cost of purchasing imported petroleum products.

Stabilization mechanism

Chile has the Mepco fuel price stabilization mechanism, which gradually passes on to consumers the difference between the market base price and ENAP's wholesale price. Its adjustments take place once every three weeks.

ENAP emphasizes that it does not set or regulate retail prices at filling stations. The final cost for drivers is determined by distributors, so prices may differ between stations. The new increase in diesel prices may have the greatest impact on freight transportation and bus services.