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Hungarians drive across the border to fill up on fuel as prices soar

By Krisztina Fenyo

ESZTERGOM/STUROVO (Reuters) - Petrol prices in Hungary have jumped since the government scrapped a fuel price cap in December and raised taxes on fuel, prompting many drivers to fill up on cheaper fuel in neighbouring countries such as Slovakia or Romania.

Across the Danube river in Sturovo, Slovakia, diesel cost 1.619 euros ($1.76) per litre at the weekend at a local filling station versus 690 forints ($1.90) at a MOL station in the Hungarian city of Esztergom. The price difference was smaller on petrol.

"We travelled around in Slovakia during the holidays and when we filled our tank we saw how much cheaper it was here," said Tibor Toth, who drove across the bridge that connects Esztergom and Sturovo to fill his tank.

"We only have to cross the bridge and we are here, so obviously we will come over more often for this."

Re-elected for a fourth straight term in April 2022, Prime Minister Viktor Orban is facing his toughest economic challenge to date, with inflation running above 24% and the economy headed for stagnation this year.

His government was forced to abandon a year-long cap on retail fuel prices for households amid a severe shortage in early December.

At the same time the government raised the excise tax on fuel and placed additional taxes on oil and gas firm MOL's profits made on Russian crude.

Hungarian fuel prices were higher than elsewhere in the region partly due to the higher taxes but also because the price cap distorted the free market for fuel, cutting competition, said Tamas Pletser, regional oil analyst at Erste Investment.

Firms stopped importing fuel due to low prices last year, aggravating the shortage, while a lot of smaller petrol stations were forced to close due to mounting losses.

"Overall, they raised the tax by around 70-80 forints per litre which pushed Hungarian prices above the level of neighbouring countries," Pletser said.

The government did not reply to emailed questions from Reuters.

Reuters could not independently assess the scale of cross-border petrol purchases.

($1 = 364.0200 forints)

($1 = 0.9195 euros)

(Reporting by Krisztina Fenyo and Krisztina Than; editing by Jason Neely)