Costa Rica Subsidizes Asphalt and Gas

The formulas that determine the prices of products sold by the monopoly which is the state run oil company contain factors that create subsidies for gas and asphalt consumers at the expense of gasoline and diesel consumers.

Monday, December 8, 2014

An article published in reports on the results of an investigation into the calculation of consumer prices of automotive fuel, which states that since August 2008 changes have been put into effect to the formulas determined by the Regulatory Authority for Public Services (ARESEP), harming "... consumers of diesel and gasoline, who pay more per liter than the asphalt companies and gas users who save millions from the lower prices."

Researchers at La Nacion found that "... this subsidy to lower prices of gas and asphalt (and raise diesel and petrol), is hidden in the price formula created by ARESEP in November 2008."

In a technical report, ARESEP recognized that the formula "... cheapens fuels which are in less demand at international prices, at the cost of adjusting to a greater extent, prices of the most expensive products in the international market (petrol and diesel)" .

Regarding the benefits obtained from the lower prices of asphalt by construction companies the article states that it is impossible to know whether that benefit impacted on the dip in construction contracts and road maintenance since "... due to the high staff turnover in recent years it is impossible to find an official to clarify the case. " However, investigators at La Nacion found that when analyzing the "... two large national tenders for road maintenance, awarded by the Conavi in ​​2005 and 2009," it appears that there were no reductions in the amounts charged in those contracts for asphalt materials, but rather upward adjustments.

¿Busca soluciones de inteligencia comercial para su empresa?

More on this topic

Costa Rica: Oil and Diesel Will Keep Subsidizing Gas

January 2016

Concern over the serious impact on the productive sector of a 72% increase in gas prices has faded, while accusations of inefficiency and a monopolistic state oil company still persist.

Although the ARESEP is expecting to submit to a public hearing the new pricing methodology which would eliminate the subsidy from the cost of Liquefied Petroleum Gas (LPG), asphalt and bunker fuel, and increase the cost of a 25 pound cylinder from ¢ 6,410 to ¢8,470, the Government of the Republic has decreed a new sector policy for prices, in order to avoid the increases proposed by the regulator.

Monopolies and Expensive Fuel

October 2012

Costa Rica, where fuels are under the state monopoly of the Costa Rican Oil Refinery (RECOPE), has become the country with the highest gas prices in Central America.

Juan Carlos Hidalgo, on his blog on, says the latest increase pushed up the price of better quality gasoline above $1.50, and that even President Chinchilla has made public her concern over the situation.

Diesel Price Worries Farmers in Costa Rica

September 2011

Complaints have been made about loss of competitiveness due to fuel costs being the highest in the region.

A study by the National Chamber of Agriculture and AgroIndustry (CNAA) states that in June the price of a gallon of diesel cost, on average, $4.71 in Costa Rica, $3.76 in Panama, $4.02 in Guatemala , $4.44 in Nicaragua , $4.15 in El Salvador , and $4.20 in Honduras.

Costa Rica: New Model for Calculating Fuel Prices

February 2011

The regulatory authority is investigating a new methodology for setting fuel prices.

The proposal would set a maximum selling price and gas stations could sell below that ceiling by way of discounts.

Currently, the Regulatory Authority for Public Services (Aresep) sets a single price for each type of fuel which the gas station must apply throughout the country, regardless of their sales volume.