Monday, November 9, 2009

Gasoline Subsidies Again


Gasoline Subsidies Again

The de facto government of Roberto Micheletti has again restored the government subsidies of the price of gasoline and diesel in Honduras. Under Manuel Zelaya the government had been able to withdraw the subsidies and guarantee fairly stable prices through the agreement with Petrocaribe to supply the national supply.

Since the coup, Petrocaribe cut the de facto government off from this oil supply, and it has resorted to the open market, buying from Shell, Chevron, Texaco, etc. at market rate. To try and shield the Honduran market from the rapid price fluctuations of the spot fuel market, it has gradually been reintroducing price supports into the formula that controlls the price of fuels in the country.

Today, the minister of Commerce and Industy, Benjamin Bogran, announced that the government would be absorbing one half of the real increase in the cost of fuel. The real international reserves have fallen below $2000 million. Its not clear where this unbudgeted fuel subsidy is coming from. Could Micheletti be spending without budget support, as he accused Zelaya of doing?

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