Reduce the impact of energy shocks.

TP - The government's policy decisions, and those of the Ministry of Industry and Trade and the Ministry of Finance during this period of fluctuating fuel prices, have significantly contributed to cooling down fuel prices and mitigating the impact of the energy shock from the Middle East.

The conflict between the US, Israel, and Iran, along with Tehran's subsequent retaliation by "tightening" the Strait of Hormuz – through which more than 20% of the world's oil passes – quickly destabilized the global energy market. Crude oil prices surged, at one point reaching $119 per barrel, putting pressure on the domestic market. RON 95 gasoline prices skyrocketed by 60-70% in a short period, at one point climbing to 33,840 VND/liter, creating significant pressure on the entire economy .

Within just a few days, the unintended consequences spread rapidly into daily life. Transportation businesses calculated the need to reduce trips and stagger frequencies; logistics costs increased; and the aviation industry faced pressure from sharply rising fuel prices. Bus ticket prices and transportation fares edged up daily. Outside the market, from budget restaurants to essential consumer services, many goods began to experience price increases.

In this context, the response of the Government and the inter- ministerial committee of Industry and Trade - Finance this time shows a clear operational axis: maintaining external supply sources and mitigating internal shocks.

The lessons learned from the 2022 oil crisis, caused by the Russia-Ukraine conflict, seem to have been thoroughly considered by the authorities in this current upheaval.

From the outset, energy diplomacy channels were activated, not only to maintain traditional supply sources but also to expand alternative sources. The Nghi Son Refinery and Petrochemical Plant, the country's largest supplier of petroleum products, faced the risk of supply disruptions. The Prime Minister not only requested Kuwait to ensure a stable supply but also directed the expansion of contacts with partners in the Middle East, while seeking additional sources from Africa, Japan, and more flexible supply markets such as South Korea, the United States, and the Mediterranean region.

As a result, Nghi Son has sufficient crude oil reserves to maintain maximum operation and is assured of supply at least until the end of May. Meanwhile, Dung Quat refinery is prioritized with domestic crude oil sources, combined with supplementary imports, helping to control the risk of short-term shortages.

Along with that, the price management approach has been comprehensively changed to be more market-oriented. The 7% fluctuation threshold is used as a flexible trigger mechanism, allowing the regulatory agency to shorten the adjustment delay when world prices fluctuate sharply, instead of waiting for the fixed 7-day cycle. As a result, domestic gasoline and diesel prices are more closely aligned with international developments, limiting the hoarding and small-scale sales by businesses, which previously disrupted the supply chain.

In particular, the recommendations of experts and businesses this time were listened to more attentively by the Government and regulatory agencies. The Fuel Price Stabilization Fund continues to play the role of a short-term buffer, but as the fund's capacity shrinks, fiscal policy is being introduced to share the pressure.

The drastic reduction in fuel taxes, even bringing taxes such as import tax, environmental protection tax, special consumption tax, and value-added tax to 0% for a certain period, is a policy choice that clearly involves trade-offs.

Under normal circumstances, reducing these taxes to zero would be within the authority of the National Assembly. Waiting for the full process would mean the earliest possible time would be the next parliamentary session. In this context, the Prime Minister decided to activate an emergency mechanism, applying special measures “in cases where it is absolutely necessary for the national interest.” This was not an easy decision, accepting a short-term reduction in budget revenue to alleviate the rapidly spreading cost pressures in the economy.

The price adjustment on March 26th showed quite clear results. After the adjustment (RON 95 at 24,332 VND/liter), Vietnam's gasoline price remains significantly lower than many countries such as Laos (47,682 VND/liter), Cambodia (35,789 VND/liter), and Singapore (71,357 VND/liter)... This means that part of the shock was absorbed by the policy itself.

Speaking to a reporter from Tien Phong newspaper, a leader of the Department of Domestic Market Management and Development, Ministry of Industry and Trade, said that he felt "very pressured" and "almost unable to sleep for many days" while managing gasoline and diesel prices in recent days.

The pressure doesn't lie in a single decision to raise or lower prices, but rather in having to consider multiple complex variables simultaneously: hourly fluctuations in world oil prices, domestic supply, available funds, the resilience of businesses, and the direct impact on people's lives.

Source: https://tienphong.vn/giam-tac-dong-cu-soc-nang-luong-post1830936.tpo