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The era of cheap diesel is coming to an end

Santo Domingo.- The Government’s informal subsidy on diesel has been shrinking, sometimes helped by its need for revenue which has turned it towards fuels.

In just one decade the price difference between gasoline and diesel has narrowed to the point that virtually doesn’t exist.

The protection for diesel lost ground when Congress passed the Tax Reform Law in 2006, which created, among other levies, a 16% added value tax on that fuel.

Although diesel costs slightly more than gasoline in global markets, locally that fuel’s price has been treated differently, being historically cheaper.

Diesel affects a wide range of economic factors, from freight and passenger transport, to agro-industry and electricity.

The fuel’s privileged price increased the country’s use of all-terrain vehicles, especially SUVs and trucks, powered mostly by diesel engines). Their owners prefer it because it’s cheaper and less volatile than gasoline, and provides better mileage.

But as the price gap narrows, diesel’s advantage vanishes, because maintenance as well as the spare parts are more expensive on those engines.

Source: Dominican Today

Category: DR News |

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Last updated December 9, 2016 at 7:25 PM
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