Government Weighs Targeting Fuel Subsidies; Prices Not Expected to Return to Previous Levels
The government is studying subsidies only for certain sectors and fuels. Officials warn that prices will not return to their earlier levels anytime soon.
Key points
- The government is evaluating targeting fuel subsidies to specific sectors, population groups, or fuel types.
- Since January, diesel has risen 130.2% and gasoline 87%.
- The EIA projects prices will not return to previous levels in 2026 or 2027.
- Weekly allocations to contain consumer prices rose from RD$1,228 million to RD$1,500 million.
The Dominican government is considering targeting fuel subsidies toward specific economic sectors, population segments, or particular fuels. The reason is the financial pressure caused by refining costs, especially for diesel. The proposal was presented at the forum "New Reality: Dominican Republic Facing the Global Impact on Fuels," held Wednesday, November 4, in Santo Domingo.
Industry, Commerce and MSMEs Minister Yayo Sanz Lovatón and Finance Minister Magín Díaz explained that the international scenario makes it impossible to foresee an end to the crisis. According to the data presented, since January diesel prices have risen 130.2%, gasoline 87%, and the benchmark WTI crude oil barrel 67.6%.
Projections from the Energy Information Administration (EIA) indicate prices will not return to previous levels this year or next. For 2027, the Brent barrel is expected to hover around $84. Between September and October, WTI crude fell 3.3% (from $94.6 to $91.4 per barrel), while optimal diesel rose 9.4% (from $191.3 to $209.2 per barrel).
For this week's local price of optimal diesel, imports (product, freight, insurance, and port) account for 70.8% of the total, or RD$299.92. Current taxes make up 19.5% (RD$82.52), marketing margins 10.7% (RD$45.23), and a temperature adjustment of –1.0% (–RD$4.20) is applied.
On the fiscal side, weekly allocations to contain consumer price increases averaged RD$1,228 million since March, rising to RD$1,500 million over the last 15 weeks, with weekly peaks of up to RD$1,831 million.
Why it matters
If subsidies are reduced or concentrated on certain sectors, consumers who do not receive them could pay more for fuel. High prices would continue to weigh on the cost of living in the country.