Further fuel tax rises causing market nervousness

The impact of new tax hikes to be imposed on fuel is a question on the minds of all sector officials, alarmed by the tragic weekend news concerning the suicide of 84-year-old entrepreneur Kyriakos Mamidakis, founder and president of Mamidoil Jetoil, an enterprise that had filed for bankruptcy on June 9.

An additional two fuel sector enterprises are believed to be on the verge of going out of business.

Fuel consumption levels in any economy reflect its growth or contraction. Last month, the fuel consumption decline registered in Greece was the biggest ever. Compared to the equivalent month last year, unleaded fuel demand plunged by 14 percent in June, while diesel fell by seven percent.

Part of the sharp 14 percent decline this June was attributed to the surge in demand during the final days of June last year, when drivers flocked to petrol stations to fill their tanks fearing shortages as a result of the capital controls that were imposed. Not factoring in the effect of capital controls, the drop would have been about ten percent, market officials believe.

Officials are bracing for the autumn season and the impact of higher fuel taxes on the demand of heating fuel, to sell for five to six cents more per liter. Also, as of the beginning of 2017, unleaded fuel will cost drivers four cents more per liter, while diesel will cost an additional 10 cents per liter. The wider effects on the economy are also a concern.

“The fuel tax hike has arrived at the most inappropriate time. Fuel sales have fallen by 45 percent since 2009, companies are constantly seeking capital to meet tax payment commitments for fuel purchased, which runs contrary to other European markets, and tampered with petrol pumps are robbing customers,” noted Yiannis Aligizakis, president of SEEPE, the Hellenic Petroleum Marketing Companies Association.