How does MEPCO work? A brief guide to understanding how fuel prices are stabilized

CHILE - Report 10 Jun 2026 by Igal Magendzo

The Fuel Price Stabilization Mechanism (MEPCO), as its name suggests, is a mechanism that seeks to smooth sharp changes in consumer fuel prices. In principle, it does not seek to eliminate increases or declines, but rather to ensure that they reach the market gradually.

Its main objective is to act as a buffer, adjusting the specific tax to smooth the evolution of the consumer price. When the import cost of fuels rises or falls rapidly, the mechanism can temporarily reduce or increase the specific tax. In this way, sharp price jumps are avoided and the frequency of changes for the end consumer is reduced.

Because the topic of MEPCO has recently gained importance, we have prepared this report to explain how this mechanism works and how fuel prices in Chile are stabilized.

Now read on...

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