Spain has extremely rigid distribution channels that make it difficult for companies to compete among each other and push prices upward. This explains why consumption has fallen off and inflation has increased. A report from the National Competition Commission shows how this systemic weakness has affected the combustible fuel industry.
The study was done for the Ministry of Industry, because it is concerned about rising fuel prices. Gas hit record highs in August, and the Consumer Price Index (CPI) spiked in September. The government, alarmed by the impact that inflation is having on pensions and Social Security, is pressuring petroleum companies to slow down their price hikes.
Despite the economic crisis, companies have boosted their margins by 20% since 2007. There are operational flaws causing the price imbalances. The NCC has asked the government to prohibit gas stations from posting gas prices on external signs, approving new gas regulations that allow new operators to start doing business and, most important, change the way combustible fuels are stored and shipped. This work will be done by Compañia Logística de Hidrocarburos (CLH) and will have a major impact on gas stations. The NCC is demanding greater independence and fewer conflicts of interest within the CLH.
The report recommends 23 actions. If the government does not seriously embrace trade liberalization in favor of its own interest and the status quo, then the actions will slip through the cracks and inflation will have a serious effect.
