Competition in retail fuel prices more open

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Fuel prices per liter in early May, since which time they have risen. Source: Siim Lõvi /ERR

Competition in the fuel retail market is picking up, with price wars, often based on local competition, arriving as coronavirus restrictions fall away, ERR's online news in Estonian reports.

Tarmo Kärsna, board member at fuel retailers Alexela, says prices are being influenced by fierce competition in Tallinn and other higher population-dense areas.

Kärsna said: "In some cases there are fewer customers, in others, a move towards a competitor. In others still, within a couple of months, someone will have opened a new filling station and lowered prices, raising awareness in the surrounding area, with a view to people embracing it. In this way an open market, so to speak, arrives."

This week, a liter of 95 gasoline ranges from around €1.374 per liter to €1.399 per liter at pump, ERR reports.

This follows gradual price rises after the low of 2020, when falling – at one point negative – world oil prices in the early part of the year, together with cuts in diesel excise duties, were superseded by the arrival of the coronavirus pandemic.

Last summer saw diesel fall to below the one-euro-a-liter mark, while gasoline prices have risen, aside from price promotions around the Christmas and New Year's break.

Falling custom during the pandemic also led to outlets engaged in a price war, often with the entire market reacting to a price change initiated by one market participant. 

Risto Sülluse, head of marketing and communications, at Neste, said : "The price variation is important for differentiating in competition. Fuel sellers actively monitor each other's price movements and react quickly. If someone lowers the price, the others will catch up quickly. If someone raises the price, they will react quickly too."

Tarmo Kärsna said that the Ülemiste junction in the south of Tallinn, close to the airport, has a high density of fuel outlets and so is one of the major hotspots

Consumption also mirrors, restrictions, he said – while the first quarter of this year saw lower sales than the corresponding period last year, easing restrictions in the second quarter is likely to be matched by greater mobility and thus greater fuel sales, while the traditional pre-pandemic summer rise in prices may this year occur as demand rises.

At the same time, while world crude oil prices have their effect, of greater influence is the local prices of the refined, finished product, he said.

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Editor: Andrew Whyte

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