Heating fuel demand up 40% in January, power cost a factor

Heating fuel demand in 2021 was 17 percent lower than in the previous year, but, even so, demand for this fuel has been making a strong comeback over the past four months as elevated electricity prices have prompted a greater number of consumers to turn to heating fuel for heating, domestic petroleum sector officials have told energypress.

Demand for heating fuel in January rose by 40 percent, compared to the equivalent month in 2021, while demand for this fuel increased by 58.5 percent between mid-October last year – when heating fuel was made available in the market for this winter season – and December 31, 2021 officials noted.

Petroleum sector officials described the rebound as a clear comeback for heating fuel, despite this market’s 17 percent contraction in 2021.

Heating fuel demand between January and April, 2021 was 30 percent lower compared to the equivalent period in 2020, a year during which heating fuel demand was boosted by exceptionally lower prices.

Heating fuel sales in 2021 totaled 1.04 million metric tons, down from a total of 1.25 million metric tons in 2020.

Energy crisis prompts heating cost turnaround, gas most expensive

The intensity of the energy crisis has brought about radical change to the market, making natural gas, until recently regarded as a lower-cost heating option, more expensive, a study conducted by the National Technical University of Athens (NTUA) and the Chemical Process Engineering Research Institute (EKETA) has confirmed.

Heating fuel, if taking into account subsidies offered by the Greek State, is the most affordable heating option under the current market conditions, the study found.

Pellet heating is also one of the most affordable options, the study noted.

Heating fuel demand skyrockets 185%, costlier power a factor

Heating fuel demand skyrocketed 185 percent in October compared to the equivalent month last year, despite higher price levels, 45 percent over prices registered a year ago, a trend that has been attributed to three main factors.

Firstly, households have been encouraged to use their oil-based heating systems by a broader subsidy support package introduced for this winter, expected to benefit one million households with amounts ranging from 100 to 750 euros. Last winter, approximately 700,000 households were eligible for heating fuel subsidies.

Secondly, households are placing heating fuel orders now fearing further price rises could lie ahead.

Thirdly, the sharp increase in electricity costs brought about by the energy crisis has prompted consumers to put aside electric heaters and return to oil-heated radiators, which, in many cases, had been left unused for some years.


Fears of energy market unpaid receivables rebound growing

Government as well as electricity and natural gas company officials appear increasingly concerned about a rebound in unpaid receivables at energy firms as a result of exorbitant energy price increases faced by consumers.

The scale of the ongoing energy crisis plus the inability of analysts to make confident price projections has government officials scrambling for solutions, including through EU action, that could lessen the energy cost burden for consumers and protect supplier cash flow.

During a meeting yesterday with European Commission Vice-President Margaritis Schinas, Greek Prime Minister Kyriakos Mitsotakis reiterated a European Commission proposal for revisions that could enable energy bill payments through installments.

According to sources, the Greek government could insist on a proposal made by energy minister Kostas Skrekas for the establishment of an EU transitional compensation fund, supported by CO2 emission right revenues, distributing amounts to member states as energy-crisis aid.

The Prime Minister suggested this proposal during his meeting with the European Commission deputy, who did not offer a direct response but indicated that a European solution would be sought during an EU summit scheduled for next week, sources said.

Support for energy consumers would also help the finances of suppliers, who, as a result, would be in a better position to offer energy bill payments through installments.


Heating fuel season begins with sharply higher prices, up 45%

The country’s heating fuel season gets underway tomorrow with sharply increased prices ranging from 1.13 to 1.15 euros per liter in urban areas and over 1.20 euros per liter in remote areas, including islands, representing a 45 percent increase compared to a year ago.

A year earlier, heating fuel prices averaged 0.798 euros per liter, driven lower by the pandemic-induced drop in demand.

The heating fuel price rise for this winter season has been attributed to a rebound in demand following the lifting of Covid-19 restrictions, combined with the price surge in international energy markets, also impacting the price of heating fuel, used by hundreds of thousands of homes around the country.

Households are moving fast to place their heating fuel orders, fearing further price rises, supply company officials have informed.

However, the quantities being ordered are smaller compared to a year earlier, the officials added, a trend highlighting the increased financial challenges faced by households.


Natural gas prices double last year’s levels, alarm widespread

Retail gas prices are seen increasing by at least 100 percent in October, compared to a year earlier, the lowest level at present being 40 euros per MWh, double the level of a 20-euro per MWh price in the equivalent month last year.

The situation, caused by an unfavorable combination of factors in international markets, is truly alarming as market officials admit not being able to forecast any limit to the upward trajectory.

Natural gas prices at the pivotal Dutch TTF platform yesterday reached 75 euros per MWh, up from 40 euros per MWh in July, 50 euros per MWh in mid-August and 60 euros per MWh in the first ten days of September.

The price surge appears set to come as a shock for natural gas consumers between October and December. It places many gas companies, especially smaller ones, under extreme pressure, and is a major headache for the government, which could need to deliver a new round of subsidy support measures as a follow-up to initial 150 million-euro support action offered to help consumers combat higher electricity prices.

Gas company officials insist that, even under such extreme market conditions, gas will remain a lower-cost option compared to heating fuel.


EU’s ‘Fit for 55’ package to spike heating, auto fuel costs

The EU’s new, more ambitious climate-change package, “Fit for 55”, aiming for a 55 percent reduction of carbon emissions by 2030, compared to 1990 levels, will prompt sharp price increases in diesel heating fuel costs as well as fossil-fuel powered transportation.

The prospective package, announced yesterday in the form of twelve legislative proposals, has already raised the question as to who will cover its cost – consumers, producers, or both.

The package will lead to wider implementation of the ETS for buildings and transportation.

Inevitably, less affluent households and smaller enterprises whose heating and transporation needs are exclusively covered by fossil fuels will face even greater pressure.

The European Commission has proposed a 61 percent reduction of carbon emissions from sectors covered in the EU’s existing Emissions Trading System (ETS), compared to 2005 levels, up from the previous target of 43 percent.

Gasoline sales down 40% this month, poor year for fuel sector

The liquid fuel market has been the hardest hit energy sub-sector in 2020, as highlighted by poor sales figures for December, by far the worst month of this year’s pandemic-affected sector results.

Gasoline sales are expected to end December 40 percent lower compared to the equivalent month a year earlier, car diesel sales are forecast to drop 15 percent, while heating fuel demand has slumped by 50 percent this month compared to this time a year earlier.

Overall, liquid fuel sales are projected to end 40 percent lower in December and 6 percent for the year.

Heating fuel demand for the year is projected to end up 20 percent, a development attributed to considerable purchases made last April by households, who made the most of lower prices.

Though Greece’s current lockdown has permitted motorists to circulate within their regions until an evening curfew, the forbiddance of longer-distance movement, from province to province, has been a major setback for auto fuel sales.

In addition, the pandemic-induced slump of the tourism sector, a major source of revenue for Greece’s fuel market, has also impacted fuel sales.

Looking ahead, petroleum firm projections for the first quarter of 2021 are not optimistic. Sector players believe lockdown restrictions will continue to be enforced.

A recent 7 percent tax increase on auto fuel, to support green energy, is another setback for the liquid fuel market. Prices, at the pump, will rise by 3 cents per liter.


Schools, airlines, heating fuel to contain lockdown effects on fuel

Fuel market officials are hoping certain lockdown exemptions, such as the non-closure of primary schools, plus airline traffic and heating fuel demand, will result in smaller losses for the sector compared to the country’s first lockdown earlier this year.

If the latest measures remain as they stand for the lockdown’s duration of at least three weeks, beginning last Saturday, then the decline in fuel sales is expected to be far milder than the 45 percent reduction experienced during the country’s first lockdown, implemented last March, fuel market officials have projected.

Seasoned authorities estimate the fuel market’s reduction in sales could reach 20 percent.

The ongoing transportation by parents and guardians of primary school students to school, continuation of flights, as well as greater heating fuel needs of household members kept in by the lockdown, are all expected to help contain the drop in fuel sales.

Though these factors may offer fuel professionals some consolation, the fuel market is entering uncharted territory as the eventual duration of the lockdown remains unknown.

Also, a large number of households have yet to recover from the financial consequences of the first lockdown. Their budgets will have tightened.

Oil firms troubled by heating subsidy revision for gas, firewood inclusion

Petroleum product traders are troubled by government thoughts to broaden the eligibility of heating subsidy support so that, besides heating fuel, three new categories, natural gas, firewood and pellets, are also added to the list.

Contrary to natural gas, heating fuel is overtaxed, while the encouragement, through subsidies, of firewood as a heating source does not make environmental sense given the high levels of resulting smog, petroleum industry sources have pointed out.

High levels of smog have been recorded in Greek cities during winters over the past decade or so as struggling households have sought lower-cost heating amid the recession.

Heating subsidies are already limited and barely cover the needs of underprivileged households, petroleum industry officials have noted, fearing their share of the total could diminish if other heating sources also become eligible.

Heating fuel supply for the approaching winter season began yesterday at a level of 77 cents per liter, 2 cents lower than the price level at the close of last season’s trading, in May. Heating fuel prices are forecast to remain low, sources said.

Despite the lower price level, demand was subdued on opening day, yesterday. Many consumers took advantage of last season’s price drop and are already stocked up. In addition, temperatures around Greece remain mild.

Lockdown relaxation limits fuel sales drop, tourism pivotal

Petroleum product traders have experienced a slight improvement in sales figures since the relaxation of lockdown measures at the beginining of May.

During this 13-day period, the fuel sales drop has been contained to 30 percent compared to regular levels, far better than a slump that reached as low as 60 percent in April.

The pandemic’s impact on diesel has been milder. Sales for this fuel are now down 10 percent after dropping 30 percent in April.

Market officials attributed this increase to the first-stage relaxation of lockdown measures. Also, the general public has remained apprehensive about using public transport, prompting a further rise in the use of private vehicles.

Heating fuel sales were up over the past few weeks compared to  an equivalent period last year as consumers took advantage of a massive drop in oil prices to stock up for next winter.

A new extension granted by the government for heating fuel supply until the end of the month is not expected to make an impact on sales figures. Most consumers have already stocked up and heating fuel prices are now gradually rising.

The pandemic’s development, impact on wider activities and, most crucially, tourism this summer will be instrumental for the future course of fuel sales figures. Current levels are expected to remain unchanged over the next two to three months.

A finance ministry relief measure for payments of special consumption tax and VAT on fuel purchased between May 4 and 19 has not been a great help for market liquidity, officials pointed out.

Fuel demand dives, heating fuel sales supported by low prices

Fuel consumption, down to unprecedented levels as a result of the lockdown, has produced a nationwide gasoline sales drop of 70 percent this month. The slide in gasoline sales has been even steeper in urban centers, falling by as much as 80 percent.

The reduction in demand for diesel has been milder, limited to levels of far less than 50 percent as a result of ongoing agricultural activities around Greece.

On the contrary, heating fuel demand has stood firm against the wider downward trend, supported by extremely attractive prices that have encouraged consumers to stock up as early as now for next winter.

Heating fuel prices have registered a 24 percent drop since the beginning of the year, falling to 0.815 euros per liter from 1.07 euros per liter.

The heating fuel price reduction in Greece is far smaller than that of international oil prices because a considerable percentage of the local retail price is comprised of taxes.

The heating fuel season ends at the end of April, meaning consumers have about two more weeks to place orders at the current prices.

An OPEC agreement reached last week for a 10 percent reduction in output considerably increases the likelihood of a price rebound. The production cutback puts an end to the Saudi-Russian price war.

Domestic fuel market battered, first-half losses projected

Petroleum product traders, overwhelmed by the dramatic drop in fuel sales as a result of restrictive measures prompted by the coronavirus crisis, are making grim forecasts for financial results in 2020.

Losses are projected for the first half while, overall, 2020 will be a bad year, fuel company officials are already admitting.

Fuel demand is seen falling by 40 percent during the final week of March and throughout April, company officials have told energypress.

So far this month, gasoline sales have dropped 20 percent, demand for diesel fuel is down 8 percent, while, on the contrary, heating fuel demand has risen by 22 percent as a result of the ongoing chilly weather combined with the crisis’ enforced domestic living.

Market officials expect fuel sale figures to slip further in the two-month period covering April and May. They have forecast a 50 percent drop.

“It is getting worse by the day for auto fuel sales,” one market official stressed.

Even so, the year’s financial concerns for petroleum firms can still be reversed if restrictive measures are not extended beyond May, some officials believe.

The upcoming summer tourism season will be one of the worst on record, petroleum company officials have forecast, noting that even if the coronavirus outbreak is brought under control in Greece, predictions cannot be made for other countries. The tourism potential for June has already been written off, the sources added.

Overall Greek fuel demand continued slide in 2018, falling 5%

Volume-based fuel sales fell by 5 percent in 2018, driven lower primarily by weaker gasoline and heating fuel demand, which dropped by 5 and 17 percent, respectively, according to data released by SEEPE, the Hellenic Petroleum Marketing Companies Association. The drop in auto diesel demand was milder, falling 1.5 percent.

These latest figures, four months following Greece’s exit from the country’s bailout program, do not bode well for the economy, fuel data being a key indicator of its prospects.

The SEEPE figures could have been worse had it not been for the cold weather experienced in December, which generated a 15 percent increase in monthly demand for heating fuel.

Despite the latest slide in overall fuel demand, the extent of the drop is smaller compared to slumps of previous years during the recession, which has led to successive fuel demand reductions over the past seven years. Heating fuel demand has slumped by a total of 43 percent during this period.

Fuel taxes in Greece have played a big role in this weakened demand. Greece’s Special Consumption Tax (EFK) imposed on fuel is Europe’s third highest, behind the Netherlands and Italy, while the VAT rate, at 24 percent, is the continent’s fifth highest. Greek gasoline prices are the EU’s third highest. Netherlands tops the list and is followed by Italy. VAT rates in most developed EU states range between 19 and 21 percent.

Greece’s VAT-EFK combination is causing double taxation – or tax on taxes.

The influence of euro-dollar exchange rates has impacted fuel prices in Greece at an extent of between 30 and 40 percent. Local retail fuel prices are mainly shaped by fuel taxes to a degree of between 60 to 70 percent, well over the EU average. The fuel tax proportions are lower in member states such as Germany, Finland and France, where disposable income levels are far higher than in Greece.



Households, businesses, inflation impacted by OPEC-sparked fuel hikes

Sharp price increases of auto and heating fuel, as well as natural gas, are impacting household and business costs as well as the inflation rate, data released by ELSTAT, the Greek statistical authority, has shown.

The price of natural gas registered a 13.1 percent price increase compared to November last year, diesel was up 11.3 percent, and heating fuel rose 14.7 percent, the ELSTAT data showed. On the contrary, the price of gasoline fell by 3.8 percent compared to the equivalent month a year earlier.

The price shifts have been attributed to international crude and petroleum product prices, shaping prices set by refineries and traders.

Subsequently, transportation and operating costs for businesses, determined, to a large extent, by fuel price levels, have risen considerably.

Further fuel price rises are expected as a result of a decision by OPEC members and other oil-producing countries to reduce output by 1.2 million barrels per day.

The price of Brent Crude Oil rose to more than 63 dollars per barrel following the announcement of the cutback by oil producers last Friday before correcting to less than 60 dollars in the days that followed.


Fuel sales down 2.8% in Greece for 9-month period

Gasoline, diesel and heating fuel sales – in volume terms – are continuing to fall as highlighted by a 2.8 percent decline for the nine-month period compared to the equivalent period last year, official energy ministry data has shown.

Paradoxically, this overall fuel sales drop in Greece coincides with record-breaking tourism industry figures. Locals have cut back on holiday-related domestic travel while many visitors from abroad are opting not to use vehicles during their stays, pundits noted. The increasing trend of all-inclusive travel packages offered by hotels is also believed to have affected domestic fuel sale figures.

Heating fuel registered the biggest drop, falling 23.7 percent during this year’s nine-month period compared to a year ago. Gasoline sales dropped 1.8 percent during the same nine-month period, while auto diesel fuel volume-based sales buckled the trend to rise by 3.5 percent.

September’s overall volume-based fuel sales figure was also down, falling by 3.6 percent compared to the equivalent month last year.

Gasoline sales registered a sharp 5.5 percent drop in September compared to the same month a year ago. The diesel fuel sales drop was milder, slipping 1.7 percent this September.

Local heating fuel begins trading today 20% higher than last season

Heating fuel for the upcoming winter begins trading today in the Greek market approximately 20 percent higher than prices last season, primarily as a result of taxes and higher international fuel prices.

Last season, heating fuel began trading at a level of 94.4 cents per liter in October, 2017 before reaching 1.025 euros per liter in April, according to official Greek economy ministry data.

This season, heating fuel will begin trading at 1.14 euros per liter, according to market estimates.

Higher fuel taxes in Greece and rising international fuel prices have prompted a major drop in local demand for heating fuel as households have turned to more affordable heating alternatives.

Greek heating fuel demand has dropped by 72 percent between 2003, a record year when domestic consumption peaked at 4.25 million tons, and 2017, official market data has shown.

Local heating fuel prices seen rising by 20% this winter

The cost of heating fuel in the Greek market is expected to increase by 20 percent this winter compared to last winter season as a result of higher  international fuel prices.

The retail price for heating fuel orders amid the current market conditions would be set at around 1.14 euros per liter compared to roughly 0.95 cents per liter last winter, local traders have estimated.

The anticipated price rise has raised concerns among traders who dread a further slump in heating fuel demand this winter following a 20 percent drop last season, primarily as a result of the mild winter. Many traders struggled to remain afloat.

Brent crude oil prices have exceeded 81 dollars per barrel over the past few days and American crude oil prices are now close to 72 dollars per barrel. Despite a slight drop yesterday of about half a percentage point, oil prices, on an upward trajectory, have risen to their highest levels of the past four years. In forecasts made yesterday, analysts predicted the Brent price would reach 82 dollars per barrel during the final quarter of 2018.

Responding to the rising fuel prices, Greek refinery officials reminded that a special consumption tax (EFK) and other taxes represent 46.2 percent of the retail price for heating fuel.



Local refineries post subdued 1Q results, higher fuel prices now dropping

The current year did not begin favorably for the local petroleum sector, as indicated by first-quarter results posted by of the country’s two biggest refineries controlling the Greek fuel market.

Drastically reduced heating fuel sales were the main factor behind the disappointing first quarter results, compared to last year, despite an increase in demand for diesel and a modest rise in gasoline sales following an extended downward trajectory.

ELPE (Hellenic Petroleum), which announced its first-quarter results yesterday, reported a 13 percent fuel sales decline, overall, down to a level of 826,000 metric tons, despite operating a greater number of refueling stations, up to 1,749 in the first quarter from 1,737 a year earlier.

ELPE’s heating fuel sales fell by 22 percent in the first quarter, year on year, while diesel and gasoline sales rose by 6 and 2 percent, respectively.

The increased first-quarter sale figures for auto fuels, offering wider profit margins, helped the group’s EBITDA/metric ton margin improve slightly, by one percentage point.

Motor Oil Hellas, the Greek fuel market’s other major player, reported a 6.2 percent overall decline in auto and heating fuel sales.

Auto fuel sales at the group rose by 3.8 percent in the first quarter. Gasoline sales were up by over one percent while demand for diesel increased by 5.8 percent. However, the significant drop in heating fuel sales drove the group’s overall results lower.

Higher fuel prices in the first quarter have been attributed as a factor affecting sale levels in the sector. Prices at local pumps have just begun dropping as lower international prices begin to impact the Greek retail fuel market.


Major fuel demand decline in 2017, signs of life in January

The prolonged bailout negotiations in the first half of 2017 not only impacted bond spreads and business loan interest rates but market sentiment, overall, which has affected fuel consumption levels, officials at Greek petroleum company Motor Oil Hellas noted yesterday while presenting the corporation’s results.

Despite the negative Greek market conditions, the refinery group posted record results as a result of its increased emphasis on exports to make up for lower demand in the domestic fuel market, which appears to be entering a new crisis period.

Overall demand for the corporation’s petroleum products in 2017 fell by 2.1 percent. Gasoline registered the biggest drop, falling 3.1 percent. Diesel demand increased by 0.5 percent while heating fuel, affected by poor activity in December, down by 30 percent compared to the equivalent month a year earlier, fell by over 2 percent, overall.

Latest fuel market data for January showed some signs of improvement for the auto fuel sector but the decline in heating fuel demand was sustained.

Gasoline demand rose by 11 percent in January, diesel demand rose by 23 percent, while heating fuel demand slumped 37 percent.

The significant decline in heating fuel registered for the winter gone by can be attributed to a particularly heavy winter a year earlier, which had boosted heating fuel demand to particularly elevated levels.

Returning to Motor Oil Hellas, overall fuel sales, in volume terms, achieved a new record level in 2017, reaching 13.7 million metric tons, up from 13.04 million metric tons in 2016. The refinery group’s exports exceeded the 10 million mark for the first time, reaching 10.2 million metric tons.


Poor December figures dampen fuel sector’s overall 2017 performance

Subdued fuel demand figures registered in December, including sale level drops  for certain categories, impacted the sector’s overall performance for 2017, which ended slightly down compared to the previous year.

More specifically, in December, gasoline demand fell by a level of between 2 and 3 percent compared to the equivalent month a year earlier. Heating fuel demand fell sharply by 30 percent compared to December, 2016, primarily as a result of the milder winter experienced so far, combined with a preceding reinforcement of reserves. Also, emerging as the most surprising result of all, auto diesel demand fell by a considerable 10 percent.

Subsequently, the overall drop in sales for 2017 is estimated to be between 1 and 2 percent, primarily as a result of the steep drop in heating fuel sales.

These end-of-year results effectively mean that the fuel sector failed to register a solid rebound for yet another year.

Officials are concerned that a tax hike planned for diesel will further impact the sector.


Local diesel prices now EU’s 5th highest from 15th a year ago

The price of auto diesel in Greece has climbed ten places over the past year, from fifteenth highest to fifth on the EU-28 list, an unprecendented leap for an EU member state, according to seasoned pundits.

A year ago, auto diesel prices in the Greek market were marginally higher than the EU average but are now five percent over the common market’s average of 1.243 euros per liter.

Auto diesel was priced at 1.186 euros per liter on December 19, 2016 and has now risen to 1.303 euros per liter, a 10 percent year-on-year increase.

The sharp price increase of the fuel, prompted by tax increases, has caught many diesel vehicle owners who have switched technologies by surprise.

Finland, the UK, Italy and Sweden occupy the EU’s top four places in terms of auto diesel prices.

Greece has also climbed higher on the EU list of gasoline and heating fuel prices over the past year. Last December, gasoline prices in Greece were the EU’s fourth highest and have since climbed a place to third. The price of heating fuel in Greece has risen from ninth to eighth place in the EU since last December.

The price of gasoline in Greece is currently at 1.534 euros per liter, 13 percent over the EU average of 1.359 euros per liter, according to latest European Commission data.



Natural gas price down, EPA Attiki sets level at 5.1 cents

Lower natural gas prices are expected to lead to marginally reduced heating costs this winter for households relying on this energy source. On the contrary, heating fuel price levels have so far remained unchanged compared to last winter.

EPA Attiki, supplying natural gas to the wider Athens area, has set a price of 5.1 cents per KWh, effective as of today, down from 5.4 cents per KWh in September and an average price of 5.6 cents per KWh last winter.

The latest price levels make natural gas 42 percent cheaper than heating fuel and 68 percent cheaper than electricity.

A growing number of households are switching to natural gas for their heating needs. Besides a recent sector reform enabling flat owners to freely withdraw from old collective apartment block heating fuel arrangements, as well as a successful gas subsidy program that ended in October but is expected to be relaunched in 2018, households are also turning to natural gas as a result of an  uncertainty surrounding heating fuel subsidies.

Though heating fuel purchases for the upcoming winter began roughly one month ago, no details have yet to be provided on this season’s heating fuel subsidy criteria.

The government has already announced it will cut heating fuel subsidies by more than half in 2018, to 50 million euros from 110 million euros. Stricter income and property-based criteria are expected to apply. Consequently, either fewer households will be eligible or heating fuel subsidies will be lowered.

Last year, heating fuel subsidies of 25 cents per liter were offered to eligible households.

A decision by the finance ministry on this year’s level is not expected for some time as the first round of heating subsidies will not be made available until January.

Without a doubt, the additional strain to be felt by households stands to negatively impact the trading activity of petroleum companies.

Record numbers of households switching to natural gas

The number of new gas supply contracts has surged to unanticipated levels amid a widening field of players looking forward to the Greek gas market’s full liberalization as of January 1.

At EDA Attiki, distributing to the wider Athens area, new household supply contracts from the beginning of the year until last week, prior to the completion of a ten-month period, exceeded 18,800, up from 17,500 for the nine-month period. The market data suggests this gas supplier’s growth rate for new household contracts is increasing at a rate of 1,000 per month, meaning EDA Attiki’s latest target of 20,000 new contracts, following an upward revision, could be exceeded.

The 18,800 new household gas supply contracts established at EDA Attiki so far this year represent more than double last year’s amount and are 57 percent higher than the initial target set for the year. Quite impressively, 8,100, or 43 percent of these new supply contracts were established during the less active summer period, from June through August.

Likewise, the growth rate for new gas supply contracts established at EDA Thes, established to serve the wider Thessaloniki and Thessaly regions, has been just as robust. This supplier’s number of contracts exceeded 9,200 by early September, 3,350 of these established during the summer.

The first-half results at EDA Thess, announced prior to these latest figures, showed that the firm’s new gas supply connections grew to 5,837, up from 3,642 last year, a 60 percent increase. The total number of contracts grew to 300,587 from 285,992 last year.

Though, until recent years, higher heating fuel prices were the main driving force behind new household gas supply contracts, a legal framework revision enabling flat owners to break away from collective apartment block heating system agreements without the majority’s consent is the key factor behind the more recent household shifts from heating fuel to natural gas.

EDA Attiki estimates that it has amassed over 10,000 new gas supply contracts as a result of this legal revision.

A decision by market authorities to lift surcharge fees previously imposed on new gas supply connections, as well as the availability of subsidy programs, have also provided impetus to the shift.

Of course, the lower cost of natural gas compared to heating fuel has remained a factor. Data for early October showed natural gas is 37.5 percent cheaper than heating fuel, while its cost can reach as much as 50 percent less for household cooking and hot water needs.


Winter’s heating fuel trade begins at last year’s opening price levels

Heating fuel prices commenced trading today for the upcoming winter season at levels of between 93 and 95 cents (euro) per liter in the wider Athens area, matching last season’s opening price levels.

This time last year,  heating fuel began trading at around 93 cents and closed the season at 97 cents.

Sector officials have forecast little chance of any major price changes during the season.

However, anticipated heating fuel subsidy changes, needed as a result of a confirmed cut in national budget heating subsidy provisions from 110 million euros last year to 55 million euros this year, could seriously impact household consumption levels and oil trading company performances.

The finance ministry has yet to deliver a final decision on the new subsidy details. Either subsidy levels or eligibility criteria, or, perhaps both, could change. Last year, eligible households received heating fuel subsidies worth 25 cents per liter.

On the contrary, natural gas is continuing to gain a widening advantage over heating fuel, as highlighted by its deepening market penetration in Athens, Thessaloniki and Thessaly.

Natural gas prices are expected to range between 30 and 40 percent lower than those of heating fuel this winter.

In a letter forwarded to the government, POPEK, the country’s fuel station trading association, has called for a drastic reduction of the special consumption tax (EFK) imposed on heating fuel, noting that a rate hike failed to deliver the desired tax revenue results from this tax while also depriving households of heating fuel.


Gasoline demand drop of 4.6% dampens economic outlook

Gasoline demand fell by 4.6 percent in the first quarter of 2017, compared to the equivalent period a year earlier, official market data released by the energy ministry has shown.

The downward trajectory of market trends, especially in fuel demand, a key economic indicator, runs contrary to more optimistic forecasts trumpeted by the government, claiming the country is now set for an economic recovery.

Diesel (ULSD) demand registered a marginal 0.6 percent increase in the first quarter and auto LPG demand rose by 2.9 percent.

Howewer, in March, gasoline demand dropped by 1.4 percent, LPG sales slumped by 7 percent and heating fuel – in a seasonal development – plunged by 25.4 percent.

Market officials expect a further overall slump in fuel demand to be registered for April. Unofficial data suggests a double-digit drop in diesel sales, but refineries have not confirmed such a development.

Diesel demand fell by 6.1 pecent and 2.2 percent in January and February, respectively, before rising sharply, by 8.5 percent, in March. Diesel is the leading fuel of choice among drivers in Greece.

Heating fuel sales down 40%, auto fuel demand dips 2%

Heating fuel sales in Greece over the three-month period covering October to December fell by approximately 40 percent against the level registered for the equivalent period a year earlier.

A spike in heating fuel sales during December, reflected by the thousands of heating fuel subsidy applications submitted, proved insufficient to make up for the subdued orders of October and November, kept low as a result of the milder weather experienced during these two months.

Market officials do not expect any improvement in these subdued heating fuel sale figures over the coming months.

A special consumption tax increase imposed on heating fuel in October, combined with higher fuel prices ranging between 10 and 15 percent, have greatly contributed to the lower sales.

Market officials also expect a downward sales trajectory in auto fuels. Sales in this fuel category slipped by 2 percent in December compared to a year earlier.

The data coming through strongly indicates that the government chose to increase fuel taxes at a highly inappropriate time – amid rising international fuel prices.

The special consumption tax hike for auto fuels, which took effect on January 1, has increased auto fuel prices by between 4 and 5 cents per liter around most parts of the country, including VAT. Gasoline prices have risen to levels ranging between 1.49 and 1.54 euros per liter, diesel has shot up around 12 cents from 1.18 euros per liter to 1.30 euros per liter, while auto gas has risen by 10 cents per liter, from 72 cents to 82 cents.

Fuel price increases have been even steeper on islands – Cyclades and Dodecanese – which, besides the special consumption tax increase, have also been hit by a hefty VAT increase, from 17 percent to 24 percent. Gasoline prices in these regions now range from 1.66 euros per liter to 1.91 euros per liter. Diesel is selling for prices of between 1.30 euros per liter and 1.53 euros per liter. Heating fuel prices range between 1.04 euros per liter and 1.15 euros per liter.

The government is attributing the fuel price increses to the higher international fuel prices.

Total taxes included in auto fuel prices in Greece represent 72 percent of retail prices, compared to the EU average of 66 percent. Besides the higher fuel prices in Greece, consumers are also confronted by lower disposable incomes.

Critics have condemned the government for placing at risk its economic growth target of 2.7 percent for 2017 as a result of overtaxation aiming at surplus figures.



Subdued heating fuel demand reported on first day of tax hikes

Heating fuel demand was virtually non-existent around the country on Saturday, when new tax hikes on the fuel took effect, increasing its cost by about 10 percent compared to last October.

One major local trader reported a total of just twenty heating fuel orders for the day.

Definitely helping shape this trend, the weather around the country remains mild while consumers are still waiting for the finance ministry to announce its heating fuel subsidy program for this coming winter.

The finance ministry is considering implementing a geography-based subsidy system through which consumers based in colder parts of Greece, such as mountainous regions, will receive greater subsidy support for heating fuel.

Though the total amount to be provided for heating fuel subsidies will remain unchanged, compared to last year, at 105 million euros, the government intends to apply better-targeted coverage. Income and property criteria will also stay the same.

Heating fuel prices on Saturday reached around 92 to 93 cents per liter in major urban centers, up approximately 10 percent compared to last October, while prices in provincial parts of the country were reported at around 97 to 98 cents.

The government raised the special consumption tax (EFK) imposed on fuel from 23 cents to 28 cents per liter and the VAT rate from 23 percent to 24 percent – as of October 15. The tax hikes will also apply to auto fuels as of the beginning of 2017.

Fuel taxes in Greece now constitute 54 percent of retail prices, well over the EU average of 32.1 percent.

Heating fuel hits the market tomorrow at elevated prices

Following the recent ratification of a new round of fuel tax hikes in Greece, heating fuel will hit the market tomorrow at elevated prices, roughly ten percent higher than last October. Natural gas, priced at five cents per KWh for October, is currently the far cheaper option, costing 43 percent less.

Certain consumer categories will be eligible for heating fuel subsidies. However, a new subsidy model’s details will not be known until around the end of the month, when a ministerial decision is expected.

Heating fuel prices, as of tomorrow, are expected to reach levels of 93 to 94 cents per liter in the wider Athens area and even higher in provincial Greece.

This represents an increase of approximately ten percent from a year earlier, when heating fuel was priced at 85 cents per liter in Athens. Last winter, heating fuel prices fell as the season progressed, reaching levels of 70 to 75 cents per liter in April.

Higher special consumption tax (EFK) and VAT rates will come into effect for heating fuel tomorrow. Based on the new rates, taxes will now constitute 54 percent of retail fuel prices in Greece, well above the EU average of 32.1 percent. Making matters worse for local consumers, international crude prices are on the way up following a recent decision by OPEC members to contain the cartel’s daily oil production level as of November.

Most critics believe that a tax revenue increase will not be achieved, despite the heating fuel tax hikes, as a result of the anticipated drop in fuel demand and increase of illicit trade, presumptions based on past experience.

Also, officials have pointed out that demand for heating fuel will remain subdued in the lead-up to this winter period as a result of the current mild weather conditions being experienced in most parts of Greece.  Leftover fuel stocks from last winter at many households will also initially limit demand, officials have noted.

As for the revised heating fuel subsidy plan, details of which are expected at the end of this month, finance ministry officials have said new subsidies will be better targeted. Income and property-related criteria for heating fuel subsidy applicants will not be changed. But a new criterion taking regional weather conditions into account, for greater support to underprivileged groups based in colder parts of Greece, will be introduced. The total subsidy amount to be offered, at 105 million euros for this winter, remains unchanged.


IOBE report: Fuel taxes to hit growth, spark illicit trade

New fuel tax increases set to be introduced, beginning with heating fuel as of October 15, will severely undermine the Greek economy’s growth potential as well as tax revenues, according to IOBE, the Foundation for Economic and Industrial Research, in a study officially released today.

The tax revenue shortage will be caused by a further dampening of market demand as a result of the fuel tax hikes, the IOBE study notes. Besides heating fuel, tax increases on gasoline, diesel and LNG will follow as of January 1.

The government hopes this latest round of fuel tax hikes can rake in a further 400 million euros by the end of 2017.

The fuel tax hikes are made harsher by the current rebound seen in international crude oil prices, which have risen from 46 dollars to 51 dollars a barrel over the past couple of weeks, prompted by a late-September OPEC agreement for a freeze of daily output levels as of  November.

Assuming no major price fluctuations take place over the next few days in crude oil and the euro-dollar exchange rate, heating oil is expected to hit the Greek market at 92 cents per liter, up 8 percent from last year’s level of 84 to 85 cents per liter registered during the equivalent period.

This heating fuel price rise is the result of a higher special consumption tax (EFK) rate, from 23 cents to 28 cents per liter, a VAT increase on fuel from 23 percent to 24 percent, as well as refinery price increases.

Concerns over the financial standing of Deutsche Bank are applying pressure on the euro currency against the dollar.

Besides the IOBE study, Eurostat and Greek finance ministry figures also highlight the negative impact of fuel tax hikes on demand levels. Since 2009, when fuel tax hikes began rising in recession-struck Greece, fuel demand has fallen by at least 39 percent, severely affecting tax revenues.

The IOBE study also warns that illicit fuel trade will be encouraged as a result of the tax hike and inability by officials to fully enforce an “inflow-outflow” data monitoring system that would enable the Finance Ministry to track purchases and sales in the sector.