While this downward trend in sales had been apparent as it relates to gasoline since May, a fall in diesel sales, comparable at 8 percent, is a more recent phenomenon.

Mart Raamat, head of the Estonian Oil Associateion (Eesti Õliühing) says that the trend for a fall in gas purchases is a particularly good indicator of the Estonian public's purchasing power, as its main market is private consumers, evidenced further by a slight uptick in purchases in July, when the price of gas dropped slightly, as compared with June.

Raamat said: "In comparison with June, when the consumption of motor gasoline fell by 9.6 percent, a certain stabilization was seen in July when sales fell by 8.2 percent."

"The lower price gas certainly made its impact - according to the price information from the EU Oil Bulletin, the average selling price of E95 motor gasoline in July was about 11 cents cheaper in Estonia , than it had been during record prices posted in June," Raamat said.

At the same time, Raamat noted that high prices primarily affect the less well-off demographic.

"Regional gas station sales data show that the sales of motor gasoline in Harju County were twice as high as in the rest of Estonia in July. People with higher incomes in Tallinn are still managing to buy fuel, but it is more difficult for people in the rest of Estonia," Raamat concluded.

Demand in key sectors of the economy has started to fall

Meanwhile Raamat called the trend in diesel fuel consumption much more worrying.

He said: "Since diesel fuel is the fuel that drives Estonian business, July's 7.7 percent lower sales volumes compared to last year show that demand in key sectors of the economy has started to fall.

"We see a similar tendency in other parts of the world, and although declining demand will lead to lower gas station prices, it seems no one is happy that this long-awaited drop in fuel prices is the result of economic depression rearing its head," he went on.

At the same time, no trade has, so far, been significantly lost south of the border, despite Latvia's attempts to cut fuel prices by up to 12 cents in the liter by waiving the fuel bio-additive requirement last month, Raamat added, noting that effective competition so far has maintained parity.

The situation is not so rosy for diesel, he noted, where prices are around 20 percent lower and hauliers crossing the border to refuel, and the ensuing loss of tax revenue, has already been observed.

Raamat added he hoped changes would be made to fuel excise to mitigate this, after the finance ministry's summer forecast has been digested later this month.

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