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Study: The state, the main beneficiary of fuel prices; the optimal solution would be to lower taxes

July 21, 2022

The Romanian state is the main beneficiary of fuel prices, so that the best measure for the lowing of prices would be the reduction of excise and VAT, while capping would be worse than better, shows an analysis made by the Association Intelligent Energy (AEI).An analysis of the cost estimates for oil products at the pump shows that, compared to the same day in 2021, the price at the pump is 63% higher, and this increase is based on several considerations: The increase in crude oil prices by 64%, compared to the quotations on the same day in 2021, The increase in the leu/dollar exchange rate by 14%, compared to the quotations on the same day of 2021, the increase in the costs of shipping crude oil in the Black Sea by over 500%, the increase in insurance costs for ships traveling in the Black Sea by over 600%.An analysis of estimate of costs for oil products At the same time, refinery costs increased by 30%, supply costs by 100%, excise increased by 3% and the VAT perceived by the state as a result of the increase of application basis by 63%.Following gasoline quotations in 2022, they increased by 75%, more than double the price increase in Romania. At the same time, the state has profited fully from this increase, with the money collected from VAT this year, from the sale of gasoline increasing by 40%. As regards the quotations of diesel, in 2022, they increased by 80%, more than the double against the price increase in Romania. The money obtained from VAT by the state this year from the sale of diesel have increased by 40%.‘The state, in the case of fuels as well as gas and electricity is the big winner as a result of increased prices. Concretely, the state has gained supplementary against the similar period of last year (the first six months of 2022), 600 million euro from the increased price of petrol and diesel at the pump. The companies which sell fuels probably got more than the similar period of last year, the tenth part of what the state got supplimentarily’ the authors of the analysis said.‘The measures which are necessary: the diminution of VAT and excise for fuels, to limit the commercial margins for suppliers, to make a campaign of energy diplomacy for accession to the new sources and routes for oil transport, to develop a plan for emergency situations for protected consumers. The populist alternative for capping the price is the equivalent of the installation of fuel shortages in Romania in a few months’ the AEI specialists say.Unfortunately, things will not stop here. The AEI provisions show that in the near future the petrol and diesel price will increase at least to the level of quotations for these products, namely over 11 lei/l for diesel and over 10 lei/petrol.

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