Due to the United States’ withdrawal from the nuclear programme with Iran, and the stronger US dollar, the crude oil prices on the international stock exchanges are constantly growing with Brent reaching the price of $79.56 per barrel.
“Crude oil prices have been growing continuously since mid-February, which inevitably reflects both on the wholesale and retail fuel prices in Serbia, as well as in other countries. It is quite certain that the prices of oil derivatives in Serbia will grow this time around, unless there is a sharp drop in the US dollar exchange rate. In that case, retail fuel prices in Serbia would remain at the current level. If the prices in Serbia do go up, the increase will not be substantial, that is around 10%. Also, the retail prices would not be corrected immediately, but over a period of a month and a half”, says Tomislav Micovic, Secretary General of the Association of Oil Companies of Serbia (UNKS).
Compared to the beginning of 2018, crude oil price has increased by 16.8 percent, and this effect was compounded by the stronger US dollar (1.7 percent). The petrol price went up by 4.3 percent in the same period, as did the price of diesel by 5.7 percent.
UNKS says that since the beginning of the year, state fee in Serbia per litre of petrol increased by 2.63 dinars and diesel by 3.07 dinars. This is due to an increase in excise duties and VAT. The UNKS analysis shows that state excise in the price of petrol accounted for 55.2 percent of the price (82.44 from 149.4 dinars per litre) and 53.8 percent of diesel price (85.6 from 158.98 dinars per litre). Given that oil derivatives producers and importers are under pressure because of the growing crude oil, petrol and diesel prices, they are forced to correct both wholesale and retail prices. In some other countries, governments react to this kind of situation by temporarily reducing excise duties. UNKS believes that the Serbian government would have to do to same if the oil stock quotes continue to rise sharply.
Energy expert Vojislav Vuletic says that he is not hopeful that the government would decrease excise duty.
“Increase in fuel prices is inevitable after a sharp jump of global crude oil price. However, drivers should not be hopeful about their government reducing its fuel excise, or at least partially neutralize the hike in retail fuel prices. In Serbia, when the government decides to raise a duty or a fee, it is highly unlikely that it will subsequently decide to reduce it if an opportunity arises. I think it will be the same this time around too. Let me just mention the fact that our state has imposed excise duty on electricity, which no other government in the world has done. This is just for you to understand how much is the state budget empty and what means do the authorities use to fill it up. The problem is that when you increase fuel prices that will automatically lead to an increase in prices charged by all transport-related segments. The state should generate more budget funds by fighting against shadow economy, not by increasing excises”, Vuletic adds.
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