The new methodology approved by the National Agency for Energy Regulation, which provides for the capping of fuel prices, affects competition and the activity of small oil companies, consider analysts of the Institute for European Politics and Reforms (IPRE). According to these, the new methodology is not based on economic reasons and is a populist measure for reducing fuel prices, IPN reports.
In an analytical note concerning the development of the oil products sector, the IPRE analysts say the new methodology stipulates that the retail prices are set by the Agency every two weeks, depending on the quotations on regional stock exchanges. Thus, the fuel prices will also include the transportation costs, excises and taxes and a specific profit margin for the operators to be able to cover their costs.
“The capping of prices destroys competition because all the operators will post the prices set by the Agency. If the profit margin per liter is not sufficiently high, most of the gas stations in rural areas will go bankrupt. These have reduced sales and, respectively, incur much higher costs per liter of fuel,” said IPRE analyst Sergiu Tofilat.
The analyst considers alternative policies should be applied so as to limit the unjustified profits of a cartel, to stimulate competition on the market and to contribute to the consumer’s welfare. According to the experts, the formation of fuel prices must be reviewed at legislative level, based on competition stimulation principles, so that the prices are set depending on the supply and demand and ‘express’ gas stations, without personnel, are authorized, by the model of the Western states.
