Chilean Government Raises Diesel Price from $0.7 to $1.7 per Liter

The Chilean government announced Monday a historic increase in fuel prices, which are subject to a state control mechanism. Starting Thursday, a liter of gasoline will rise from $1.3 to $1.7 and a liter of diesel will jump from $0.7 to $1.7, according to the Finance Ministry. This decision aims to align domestic prices with international levels, amid sustained tensions on oil markets, as illustrated by strikes on Iran that pushed oil to $83 per barrel. Long queues formed shortly after at several gas stations in the capital Santiago.

A Control Mechanism Costing $140 Million per Week

The government of President José Antonio Kast, who took office in early March, estimates that maintaining the fuel price control mechanism costs approximately $140 million per week for public finances. Facing "very strong budget constraints," Finance Minister Jorge Quiroz stated: "We are facing one of the greatest shocks to the oil market in decades. We must make difficult decisions to preserve public finances." President Kast has set a target of reducing public spending by six billion dollars — approximately 2% of gross domestic product (GDP) — over the next eighteen months.

This strategy aims to bring the public deficit, which stood at 3.6% of GDP in 2025, to a more sustainable level. Kast, from the far right, presented the increase as a difficult but necessary decision to preserve the state's finances. The measure effectively reduces the tariff support previously extended to consumers as part of a broader fiscal adjustment.