Heating fuel down to levels not offered in several years

The cost of heating fuel, an alarming problem for Greek households in recent winters as a result of tax-related increases, has fallen to levels that have not been offered in the domestic market for several years.

At present, the retail price for heating fuel is less than one euro per liter in many regions around the country, while the cost for underpriveledged households eligible for a subsidized heating program is 63 cents (euro) per liter. Such price levels have has not been offered since 2009.

In practical terms, the cost of filling a 1,000-liter heating fuel tank has tumbled from 1,280 euros last December to 630 euros at present – for subsidized heating fuel.

If international oil prices continue falling this week – certain pundits predict a drop to 60 dollars per barrel – or even remain steady at the current level, then the price of heating fuel for Greek households could drop further to about 95 or 96 cents (euro) per liter, and 60 cents (euro) per liter for subsidized orders.

International oil prices opened the current week on a downward trajectory, declining to below 65 dollars per barrel, the lowest level recorded since July, 2009.

It has become apparent that Saudi Arabia, backed by major cash reserves and a subsequent ability to cope with a prolonged period of lower prices, has launched a price war against the USA, where the benefits of shale-oil exploitation have revolutionized the domestic energy market. Contrary to its more customary strategy of limiting oil supply as a means of increasing oil price levels, OPEC, the 12-nation cartel heavily influenced by the interests of Saudi Arabia, has decided to maintain its output at current levels of 30 million barrels per day until June, 2015, despite an oversupply and subdued international market demand.

As for the subsequent cost of transportation fuel in Greece, many petrol stations in Athens are selling for less than 1.5 euros per liter, a level not seen in the domestic market for some four years.

Although the drastic price drop is being embraced by consumers, it has unsettled suppliers who fear the effects of their devaluated existing stock, purchased at considerably higher prices. Suppliers are hoping this discrepancy will be offset by a large consumption increase of both transportation and heating fuel.

The impact on the local market of the drop in international oil prices is being muffled by a range of domestic taxes imposed on fuel, such as a special consumption tax (EFK) and VAT, which make up approximately 60 percent of the retail price. Otherwise, the drop in local fuel prices could have been even greater.