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Fuel Importers Continue Deceiving Society

Association of Young Financiers and Businessmen (AYFB) continue fuel market research, due to high public interest, extreme hike in fuel prices and international market developments.

AYFB vice president Paata Bairakhtari noted that global stock exchanges genuinely record price surge tendencies, however, Georgian market tendencies are absolutely inadequate to international realities, he said.

«Chronological analysis of the developments shows that  even a slight change in crude oil prices per barrel have immediately corrected retail prices in Georgia, while changes in stock exchange prices needs a certain period to affect the Platts prices, nothing to say about retail network. If we go in details, companies corrected tariffs for the second time at the beginning of September, when global prices on crude oil had risen by 4%, but in Georgia fuel prices had surged immediately by 7%.

However, crude oil price tendency and the Platts trend slightly differ from each other. And Georgian fuel importers mainly refer to this difference. Therefore, for more precision, we have calculated the last tendencies due to the Platts prices.

According to the current reports, price of one ton of petrol is 578 USD. If we follow the current exchange rate, price of a ton of petrol is 1433 GEL. Naturally, increased excise tax, VAT and transportation expenditures are added to this amount and these tariffs are different for each company. Taking into account these factors, today wholesale price for a liter of petrol is 1.74 GEL, while in retail sector the price of a liter of petrol stands at 2.45 GEL. Naturally, in retail sector fuel importers take additional costs, but it is unreasonable to justify 0.71 GEL difference between retail and wholesale prices by any additional expenditures.

As to future tendencies, if we observe the last tendencies on stock exchanges, we will see that healthy trades were recorded on the market and the growth trend appeared for only half a month, as a result of natural disaster in the USA, when 15 oil refineries suspended operation and oil processing declined by about 20%.

The natural disaster has also significantly affected Mexican Gulf. As a result, oil extraction declined by about 25%. Naturally this fact has affected oil price, but after 2012 the USA opened its strategic reserves for the first time and supplied 500 000 barrels of oil to the market. As a result, market prices ceased rising.

Statement by President of Turkey Recep Tayyip Erdogan has also made important influence on the market. Namely, the President of Turkey threatened to stop oil transportation from North Iraq in case of Kurdish referendum on independence. .

This statement immediately affected international oil prices. However, despite this circumstance, it is expected that in midterm period oil prices growth tendency will not be maintained», Bairakhtari said.