Lower gasoline costs bring short-term relief, while diesel adjustments reveal the state’s shifting role in energy pricing.

Ecuadorian drivers are seeing modest relief at the pump this December, though the changes underscore how fragmented the country’s fuel pricing system has become. While low-octane gasoline prices have fallen, diesel remains partially subsidized, and premium fuels continue to float with international markets, exposing motorists and the state alike to global volatility.

Beginning at midnight on December 12th, the prices of Extra and Ecopaís gasoline dropped to $2.72 per gallon nationwide, a decrease of $0.12 compared to the previous month. The reduction will remain in effect through January 11, 2026, reflecting the latest monthly adjustment under Ecuador’s price band system for low-octane fuels.

How the gasoline band is working

The band system, introduced in mid-2024, ties domestic prices for Extra and Ecopaís gasoline to international oil markets while placing limits on how much prices can move in a single month. Increases are capped at 5%, while decreases can reach up to 10%, a structure designed to gradually reduce state spending on subsidies without provoking sudden price shocks.

December’s decrease follows a period of falling global oil prices, allowing consumers to benefit even as the government continues to pare back its role in shielding the market. Officials have emphasized that these monthly adjustments are intended to normalize fuel prices over time, rather than eliminate subsidies overnight.

Behind the scenes, however, the calculation has changed. Since August, the formula used to set prices for Extra and Ecopaís has been modified to include additional components that lower the effective subsidy. At the same time, service stations saw their profit margin increase in November from $0.16 to $0.19 per gallon, the first adjustment in more than two decades. For now, that higher margin has not translated into higher prices for consumers, as international oil prices have moved downward.

Premium fuels move in opposite directions

Not all fuels followed the same downward trend. Super Premium 95 gasoline rose to a reference price of $3.53 per gallon starting December 12th, an increase of $0.13 from the previous month. Unlike Extra and Ecopaís, Super Premium is priced under a free-market system, meaning the figure set by regulators serves only as a guideline. Individual stations may charge more or less depending on local conditions.

This divergence highlights the dual nature of Ecuador’s fuel market, where regulated and liberalized prices coexist, often leading to confusion among consumers who see different fuels moving in opposite directions at the same time.

Diesel’s partial return to subsidies

Automotive diesel, meanwhile, has re-entered subsidized territory after briefly reaching a point where state support was effectively eliminated. Between December 12th and January 11th, premium diesel is priced at $2.768 per gallon, three cents less than in the previous month. At that level, the state is again absorbing part of the cost, covering an estimated $0.11 per gallon.

The current subsidy is far smaller than in the past. Prior to September 2025, diesel benefited from a subsidy of roughly $1.00 per gallon, a policy in place since the 1970s. A sharp price increase last September, which raised diesel from $1.80 to about $2.80 per gallon, dramatically reduced that burden. Since then, the subsidy has fluctuated month by month, shrinking from $0.16 in early autumn to zero in November, before reappearing in December as international prices softened.

A new formula and fewer resources

Starting this month, diesel prices are also being adjusted under a band system similar to that used for low-octane gasoline, with monthly movements tied to international benchmarks for WTI crude. As with gasoline, increases are limited to 5% and decreases to 10$.

President Daniel Noboa has also authorized temporary changes to the diesel pricing formula. Until January 11th, Petroecuador will no longer receive a profit margin on imported diesel, a move that lowers the retail price but reduces revenue for the state oil company at a time when national oil production has fallen sharply. Additional adjustments were made to how international reference prices and freight costs are calculated, shortening the averaging period used in the formula to better reflect recent market declines.

For consumers, the immediate effect is cheaper diesel. For the state, it is another trade-off between easing inflationary pressure and preserving public finances. As Ecuador continues to fine-tune its fuel pricing mechanisms, December’s mixed adjustments offer a snapshot of a system in transition, balancing political sensitivity, fiscal constraints, and the unpredictable swings of global oil markets.