Ecuador introduced a market-based price band for gasoline and diesel, effectively taking advantage of the oil price slump to usher in unpopular price reforms that the government was forced to repeal last year.
The new pricing system establishes a 5pc band around the future price of WTI crude, with monthly reviews conducted jointly by the oil and finance ministries.
The mechanism is similar to the approach taken by neighboring countries such as Chile where price spikes are mitigated by a reference price band.
Under Ecuador’s new system, retail fuel prices immediately fell as a result of the sharp decline in international oil prices. Extra gasoline dropped to $1.75/USG from a previous $1.85/USG. Diesel dropped to $1/USG from a previous $1.03/USG.
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