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Unrest in Arab countries raises gasoline prices

25 February 2011 / 22:02:38  GRReporter
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Gasoline prices in Greece reached record levels following the riots in the Arab world, and especially the riots in Libya. The reduced production in the Jamahiriya by 25% or 400,000 barrels per day causes a chain reaction in oil pricing.

The president of the federation of fuel traders Michalis Kyusis told GRReporter that the sharp rise in gasoline prices is due to uncontrolled international speculation.

"The price per barrel reached $120. We want to believe that the situation in producer countries will soon get to its normal because Greek gasoline stations already sell a liter of gasoline for 1.65 euros. This price is much higher for all Greeks, whose consumer power is very low anyway. But if the price per barrel continues to rise so rapidly we will probably have prices above 1.80 euros per liter of gasoline."

According to some participants in the fuel market, it is not excluded Greece to yearn for oil if the crisis in Libya continues in the next two weeks. Now they are looking for other sources of oil so as not to disrupt the operation of Greek refineries. Michalis Kyusis argues that the dependence of the Greek market on the Libyan oil is not significant.

"We are directly dependent on the price of Brent. Тhe moment it jumped to $120 a barrel the prices increased. Since we do not know how high it can get it is very possible to have new increases every day."

After jumping to $120 per barrel the price of oil fell to $115. Meanwhile, Judge Jamal Bin Nur of the coalition that is temporarily governing the area of Benghazi in eastern Libya said that "oil contracts which are legal and in the interest of Libyan people will be fulfilled."

Many of the places where oil is extracted, and oil terminals are located in eastern Libya, which is under the control of the revolt against the country's leader Muammar Gaddafi.

Libya is the eighth member of the Organization of Petroleum Exporting Countries with daily production of 1.6 million barrels. Saudi Arabia is committed to cover the "lost" production from Libya with the clear aim to show that as a major member of OPEC it will increase its supply to stop price rises.

Distrainment is the only hope of Greek fuel traders who fear of closures of fuel stations.

"The drop in sales over the past two years is over 40%. More than one thousand stations throughout the country were closed during this period." According to Michalis Kyusis after the season for the supply of heating oil the same number of fuel stations will shut their doors.

A meeting with representatives of the oil products market will be held in the Ministry of Regional Development and Competition on Monday. According to the liquid fuels prices supervisory authority, the average price per liter gasoline in Greece today is over €1.60 and in many areas exceeds €1.80. Heating oil costs a little more than €0.80 per liter.

"If the excise duty on heating oils gets equal to the excise duty on diesel the next year at least a thousand stations will surely close" is Michalis Kyusis’ dark forecast.
Traders believe that reduction in excise duty and of fuel smuggling is more than urgent.

Tags: EconomyFuelsPricesOil productionLibyaUnrestArab WorldSpeculation
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