The Ecuadorian government revealed on Tuesday an impending increase in gasoline prices by nearly 11%, effective at the end of June.
This decision addresses a politically charged issue that has historically triggered significant protests.
Details of the Gasoline Price Increase
During a press conference, Deputy Economy Minister Ana Cristina Avilés detailed the price hike, stating that the two primary types of gasoline will see an increase of 256 cents.
This adjustment will raise the price per gallon (3.8 liters) from $2.46 to $2.72, equivalent to $0.71 per liter. Transport Minister Roberto Luque confirmed that the measure will take effect by the end of June.
Minister Avilés explained that the price increase aims to reduce government subsidies on fuel. To mitigate the impact on certain sectors, a compensation mechanism will be implemented, particularly for road transport.
This mechanism will ensure that the price increase for these sectors is capped at a maximum of 5%, contingent upon the international oil price.
Historical Precedent and Social Unrest
Previous attempts by Presidents Lenin Moreno (2017-2021) and Guillermo Lasso (2021-2023) to eliminate fuel subsidies met with fierce resistance, leading to violent protests orchestrated by the country’s largest indigenous organization (Conaie).
Between 1997 and 2005, these demonstrations culminated in the overthrow of three governments. In 2018, Moreno liberalized the price of premium gasoline, which now hovers around $4 per gallon.
Subsidies for Diesel and Domestic Gas to Remain
The administration of President Daniel Noboa, who assumed office last November for an 18-month term following snap elections, has committed to maintaining subsidies for diesel and household gas.
Numerous social organizations are voicing their opposition to the fuel price hike, contending that the removal of subsidies is a condition imposed by the International Monetary Fund (IMF).
The IMF recently approved a new $4 billion loan for Ecuador, but the government denies any connection between the loan and the subsidy cuts.