Oil Prices Rising Faster in 2012 than in 2011

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The FINANCIAL — Oil prices are rising faster in 2012 than they did in 2011. The largest oil importer companies in Georgia have already increased fuel prices by 5 tetri. Oil prices have risen to about 121.98 USD a barrel in the world.

 

In January the prices amounted to 111.76 USD and in February – 117.48 USD. According to Platts, the international price of petrol (A-92) is 1,088.50 USD per ton, diesel (L-62) – 1,000.00 USD per ton, oil – 1,056.50 USD per ton, and black oil – 760.00 USD per ton.

“Despite the fact that we have seen a significant surge in oil and petroleum product prices on the world market, we have only raised prices by 5 tetri. The prices could have been increased by more than 5 tetri,” said Shavleg Mishveladze, representative of Lukoil.

“We increased prices at the beginning of December and then just a couple of weeks ago. The price of fuel has increased by 130 USD per ton. If we convert this number into litres, we will see that the price of oil in Georgia is four times less than in the rest of the world,” he added.

“Iran has already cut off oil supplies to British and French companies. Italy and Spain are also dependent on Iranian oil. We don’t know how OPEC countries will regulate the oil deficit on the world market caused by an embargo on Iranian fuel,” he added.

“As the companies are developing day by day, the prices being provided by them are acceptable,” said Vano Mtvralashvili, Chairman of the Union of Oil Products Enterprisers, Importers and Customers. “If so many gas stations are not being built, if the companies do not offer different discount cards, if they do not invest in various directions, then the price would be high,” he said.

“It does not matter if the companies import the fuel from Azerbaijan or from Europe. The price is determined by Platts. Logistic costs and taxes are added to the Platts price and that’s how we get the final price. If Iran’s crisis continues, it will negatively affect the prices. Russia is also seeking the benefit of the Iranian crisis, despite the fact that Russia supports Iran in its political statements. Due to the Iranian crisis the prices of fuel are increasing and Russia’s direct income is increasing at the same time. This is because Russia is the biggest mining country,” he added.

“We are not a big producing country. We import 100 percent of fuel from different countries. Those countries that are dependent on import are depended on the world’s market,” said Giorgi Kotrikadze, Director of the Association of Oil Products and Imports. “Prices of oil have increased two times already in the country. These changes are totally dependent on international prices. Oil importer companies review their price policy. If they do not increase price, their operation loses all sense,” said Kotrikadze.

America is finding a solution in supporting electric cars, which are propelled by an electric motor, using electrical energy stored in batteries or another energy storage device. This initiative will cost the country about 1 billion USD.

As for Georgia, Vano Mtvralashvili believes that the solution is to build an oil refinery. This would help the country to keep prices at an acceptable level. “We can buy raw materials from Azerbaijan and Kazakhstan. As they are our neighbouring countries the transportation fees will not be high. When the country has an oil refinery it could offer some discounts to the companies. Georgia could export excess production as well. Some experts think that reducing the taxes would be the best solution. But I do not agree, because in this case the country would lose certain amounts,” he added.

Experts say that there won’t be any significant price change in the next two to three months.

 

 

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