Despite falling oil prices consumers in Argentina are paying 3.75 USD for a gallon of gas at the pump, USD 4.23 if they want premium. This is because the government is keeping the price of crude paid to domestic producers in the 50-60 USD/barrel range. The policy began years ago as a price ceiling, paying domestic producers 70+ USD when the international price of crude was well above 1oo USD (see chart below). The program expired on December 31 of 2015, but the new government has decided to maintain it as a price floor, effectively making consumers subsidize the domestic oil industry.
The Minister of Energy, Juan José Aranguren, justified the subsidies on account of the jobs that would be lost if the prices were allowed to drop and the absence of adequate infrastructure to accommodate the large volume of oil imports that would be necessary to supply the domestic market. He promised the oil producing provinces, such as Chubut, which have been particularly hard hit by the fall in international oil prices, that the price subsidies will be maintained for another six months. Oil exporters were also being subsidized, at the tune of 3 USD per barrel, but this policy has been discontinued.3