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Victoria Mindova

Consumption of heating fuel in the Greek provinces has dropped by 50% and by about 25% in major cities like Athens and Thessaloniki due to another increase in fuel excise duties, announced the union of petrol station owners. At a press conference on the problems of the sector, it has become clear that over 1100 petrol stations in Greece have closed down since the outbreak of the crisis and some 500 will not make it even to the middle of 2012. The main reason is the drastic decline in consumption, which is due to higher fuel prices in Greece. Bankrupt enterprises have so far left without a job about 10 thousand people across the country and the trend is for this number to increase.

Union chairman Michalis Kyusis was clear that the expected € 269 million in the budget for 2012 from collection of additional funds from the increase of excise duty will not happen, because consumption is in steady decline. He gave the example of the Nevrokopi area in northeastern Greece, where 650 households had bought heating fuel in 2010 whereas now, there are only 10 households not using coal, wood or electricity for heating. "The state is spending wastefully in other sectors and is trying to offset this by constantly increasing the direct and indirect taxes, but it is only pressing demand. This forms a vicious circle in which prices are rising, demand is shrinking and permanent budget deficits are forming," said the unionist, adding that most households are not buying heating fuel, not because they like staying in the cold, but because they are unable to pay the new increased price. In particular, it is planned in the budget for next year that by October 2012, heating fuel prices should reach the average price of fuel oil, which is now about € 1.45. The price of heating fuel has risen by about 50% in the last three years and is currently about € 0.92.

"1.05% of the average petrol price, which is around € 1.65, goes to taxes and excise duties," continued the chairman of the union Michalis Kyusis. He explained that the Greeks have significantly reduced the average use of their cars and the abolition of the veto on the use of cars with diesel engines for personal use has made petrol particularly uncompetitive. Diesel fuel is taxed at 13% VAT and petrol at 23%. The cost of changing the system to make a car use diesel fuel is € 2,000. It is an unnecessary cost according to Kyusis, since the government will soon equalize the excise duties of the two fuels. "These are unprecedented high taxes and the high prices drive consumers to seek alternatives. There is no other option for transport fuels but to limit the use of cars, but as far as heating fuel is concerned, we see that consumers are returning to the old methods of heating with wood and coal."

The data provided by the union of petrol station owners show that for three years, fuel consumption as a whole has dropped by about 35%. For the first half of 2011, the drop was 17%. For 2010, the drop in fuel consumption reached 13.4% compared to the previous year, while in 2009, it was about 6%. "The increase in indirect taxes on fuel has a dramatic effect on companies that are struggling to survive in times of acute economic crisis and tragic consequences for people with low incomes and pensioners. It stimulates illegal trade in fuels and has the opposite effect on the desired objectives of increasing revenue to the state budget," concluded Kyusis.