The prolonged recession, its consequent intensifying anxiety felt by consumers, and the government’s barrage of taxes are further subduing households and disposable income levels, which is flattening any favorable market prospects offered by lower fuel prices.
Although the current average of fuel prices is 10 percent lower compared to last year, consumption levels have fallen and also establishing themselves at these lower levels.
Unofficial petroleum company data for the month of May showed total sales at fuel stations fell by eight percent, year-on-year, in volume terms.
Yiannis Aligizakis, president at EEPE, the Hellenic Petroleum Marketing Companies Association, noted that this considerable fuel demand drop concerns both unleaded fuel and diesel.
The official pointed out that last month’s drop in the demand for auto diesel was the first to be registered in two years, which, he added, reflects reduced business and industrial enterprise orders as a result of subdued overall demand.
Households, too, affected by increasing financial burdens and a negative psychology generated by a general fear that worse could still lie ahead, are limiting their car use, as indicated by last month’s eight percent drop in fuel demand, as well as other necessities, which, in turn, is reducing manufacturing levels, delivery transport, and diesel sales.
Worse still, many analysts forecast that international crude prices will rise over the next few months, which makes the country’s new fuel taxes an untimely addition for consumers as well as the government’s tax revenue objectives.
New fuel taxes will affect heating fuel in autumn and auto fuel – unleaded and diesel – as of 2017. A just-imposed one percent VAT hike on fuel, from 23 percent to 24 percent, prompted slight fuel price increases of about one cent per liter, but this is seen as a prelude compared to the prospective hikes to be caused by special tax consumption (EFK) increases.
At present, taxes in Greece represent 69.5 percent of fuel prices, whereas, as of 2017, the figure will increase to 71 percent once the special tax consumption on fuel is hiked.
Heating fuel is expected to increase by 7 to 8 cents per liter in October. As of January, 2017, the rise in diesel prices is expected to reach 11 to 12 cents per liter once the EFK hike is introduced on top of the VAT increase. Also at the beginning of 2017, unleaded fuel prices are foreast to increase by 5 to 6 cents per liter.