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18 April 2014, Friday
 
 
Today's Zaman
 
 
 
 

Turkey consumes most expensive gas in the world

1 May 2008, Thursday /İSMAİL ALTUNSOY
Turkey has the highest gasoline and diesel prices in the world due to high taxes and profit margins in addition to soaring oil prices, new energy data has revealed.

The price of a liter of gasoline reached $2.6 and diesel $2.4, according to International Energy Agency (IEA) data. With the recent price hikes, gas and diesel prices hit YTL 3.48 and YTL 3.03, respectively.

Industry specialists said they cannot estimate at what point oil prices will peak, also noting that a decline in taxes on fuel oil may help Turkey's residents a little. According to the Turkish Oil Industry Association (Petder), the economic volume of the gas sector, aviation included, is around YTL 62 billion, and the sector's value-added tax (VAT) and excise tax totaled YTL 26 billion last year.

Moreover, Turkish Fuel Stations, Oil and Gas Company Employers' Union (TABGİS) President Atıf Ketenci said the prices may decline by YKr 7-8 (YTL 0.07-8) if the main distributors stop giving out free items at gas stations based on the amount of gas purchased.

Ministry of Energy and Natural Resources data and IEA data reveal that the gasoline prices in Turkey exceed those in developed countries. The price of a liter of gas in Turkey is around $2.6, while it is $2.2 in Germany, $2.1 in France and England and $1.1 in Italy and Canada. The price of gas is around $0.8 per liter in the US.

There is a similar situation in diesel. The price of a liter of diesel in Turkey is around $2.4, while it is $1.6 in France and $1.7 in Germany.

The share of taxes in gas prices in the Turkish market is 60 percent, while it is 62 percent in Germany, 57 percent in Italy and 60 percent in Japan.

‘Taxes should be lowered'

In order to shield people from the escalating oil prices, taxes and profit margins of distribution companies should be lowered, energy experts say. An official who preferred to remain anonymous noted that the increase in crude oil prices is attributable to factors outside of Turkey's control, suggesting that prices could be improved within the country only by lowering taxes. "The negative effects of the escalating crude oil prices should be reflected to the people at the minimal level. To do this, taxes should be lowered and profit margins of distribution companies should be decreased. The Finance Ministry is receiving the private consumption tax (ÖTV) and the VAT for oil. In other words, oil is double taxed. If the ÖTV is abolished, this would bring about considerable improvement in the situation. If the profit margin of the distribution companies is fixed, this will bring further price reductions for consumers," the same official said.


‘Energy market authority should closely monitor prices’ 

Under the oil market law, main distribution companies have to notify the Energy Market Regulatory Authority (EPDK) of their highest oil sale prices, which then announces these prices to the public. According to the agency, prices applied by dealers are determined under free market conditions. However, distributors may specify or advise the highest price for their dealers under dealer arrangements.

A senior official asserted that while there have been considerable increases in oil prices recently in Turkey, it would be wrong to put the blame solely on crude oil prices. He noted that the distribution companies complained about profit margins in the past, but that nowadays they keep silent about these margins. "The profit margins of the oil selling companies have jumped from 8 to 13 percent for gasoline, diesel oil and similar products. Moreover, the product prices have increased considerably by 40 to 117 percent. The companies should provide compensation in the face of their increasing profitability. In other words, there should be price competition in the sector. However, one cannot say that there is such competition despite this profitability. The prices applied by the companies are similar. The EPDK should monitor prices. A market should be established where dealers, too, can apply competitive prices. For instance, they should be able to obtain discount prices as they obtain the highest price from the distribution companies. The companies should be prevented from announcing common prices. They mislead consumers by making small promotions. In this setting, consumers are being victimized," said the same official.

 

 
 
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