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“Rezonansi”: The Unprecedented Chaos Reigns on Georgian Oil Market

After July, oil prices, and consequently, fuel prices decreased by almost 25%, while  in Georgia petroleum products fell only by 2.5% – this means that chaos reigns on the Georgian oil market that has never occurred  before – “Rezonansi” newspaper writes.

A long and steady decline in oil prices has long made​​it possible for importers to significantly reduce prices, but apparently they do not want to give up excess profits in the context of high world oil prices.

It is interesting that under the previous government, when the price of oil declined unevenly, experts and non-governmental organizations called all the bells. Today, for some reason, no one protested against the arbitrary actions of importers. The fact is that after the change of power, the situation on the oil market has only worsened.

Today, international wholesale price of a ton of petrol is USD 805 (GEL 1 408) plus VAT – GEL 235, the excise tax – GEL  250, transport – GEL 80. In the end, a ton of gasoline costs importers about GEL 1 991 GEL. Or GEL 1.53 per liter. Today, the minimum price of a liter of gasoline is GEL 2, 05, that is, it turns out that the oil companies of Georgia are working on more than 25% of the profits.

By the same simple calculations, a wholesale price of 1 liter of diesel fuel in the Georgian market should be 1.63 GEL, at filling stations diesel is sold for GEL 2, 04 – that is, almost 20% of the profits.

Importers in one voice say that in the near future they are not going to reduce the price because once they already cut it, but in the period when they did it a ton of gasoline cost  USD 1 050, and now – USD 805. The difference is obvious.

Though in the case of the growth in international oil prices, importers immediately increase the cost of fuel at the gas stations, but now, when the international situation has changed in the opposite direction, they do not pay attention to it.
As of  cartel deals in the oil business, the Government states that this issue should be studied by the Competition Agency, but at the same time, according to Deputy Economy Minister Natia Mikeladze, the Agency cannot reduce the prices on the market – it can only examine the situation and determine the existence of cartel deals.

As it turned out, the study of the market will take at least 3 months, and most likely, the Agency will not be able to win importers who will hire the best lawyers in Georgia. Thus, a more efficient mechanism is required without which the promise of the ruling party to establish order on the fuel market will remain a bluff.

There is no competition on the oil market of the country – it can be seen with the naked eye. All world news starts with information about the catastrophic decline in oil prices, respectively, cheaper oilproducts.

It is clear that oil importers are businessmen seeking to maximize profits, but members of the government should be ashamed when they see prohibitively high prices on petrol stations.

By the way, what does  the Economic Council of the Government, which includes 40 people, do at this time? It is obvious that such lawlessness in the oil market, which takes place today, has never occurred before.