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Costa Rica Takes Action to Control Gasoline Usage Part 2

June 27th, 2008

This week, the government of Costa Rica asked for an increase of ¢145 in the price of gasoline, this to offset their recent request to lower the price of diesel fuel by exempting diesel from government taxation.

The price of super gasoline would go up to ¢801 per liter and diesel prices would fall by ¢97. Gasoline today is $5.10 per gallon for super, $4.97 for regular and $4.82 for diesel. One US gallon = 3.79 liters, so after this change, a gallon of super will be ¢3,036 or $5.88. With the regular monthly increase coming in July, $6.00 per gallon gas is pretty much assured.

Currently, the cost for a gallon of diesel is $4.82, so this will drop to about $4.11. Sounds like a nice windfall for those who chose to buy dieseled vehicles right? Nope… the government giveth and the government taketh away.

To further offset the loss of tax revenue from diesel, the government plans another little surprise to those who own non commercial diesel vehicles i.e. not your personal car or SUV. Marchamo for non commercial vehicles will double. So if you are currently donating $1,000 per year in Marchamo for your reasonably late model diesel SUV, plan on taking a $1,000 hit come December. About 66,000 private cars use diesel fuel. Last year, owners of diesel cars paid about ¢8,500 million in property tax. If approved, this will double to around ¢17,000 million.

Why is this happening? The idea here is that by reducing the cost of diesel fuel, almost exclusively used by transport semis and delivery vehicles, the resultant savings in transportation costs would be passed on down to the consumer resulting in lower prices at the cash register.

Call me skeptical, but I am way to olde to believe that what amounts to a windfall profit for owners of dieseled vehicles will pass on anything. I expect it to go into their pockets and not into the pockets of consumers. As enforcement would be difficulty or impossible, I am not expecting a reduction in food or other prices real soon.

Whether this will come to pass is unclear, but at least the government is trying to be inventive and try new strategies.