Georgian petroleum costs

For the average Georgian, the economic situation in the country is made very clear by something very obvious to everyone - petroleum prices.

The prices do change of course, but they always go up, even when the global demand for “black gold” is slackening. Moreover, in Georgia (as well as in many post-soviet countries), petroleum costs range not according to the type of fuel, but rather by the quality of the same type of fuel. On a large scale, this is making a mockery of consumers, because selling low quality petroleum at a comparatively low price at the same gasoline station where they also sell “Super” and “Premium” (top quality gasoline) is comparable to selling “sturgeon of the second and the third degree of freshness.”

However, Georgian citizens got used to such market magic a long time ago and the petroleum market remains the most stable and profitable one in Georgia, aside from the corn market. It is divided between such strong players that it's more trouble than it is worth asking them uncomfortable questions, not only for average citizens, but also for the powers that be. However, due to the fact that mass discontent gradually leads to the situation where “the lower strata doesn’t want it and the upper strata can not do it”, the case with gasoline has already seen mass protests in Tbilisi.

 “No to Georgian petroleum costs!” the protestors cry, implying somehow that the costs are really of domestic origin (even though Georgia does not produce even a single gram of petroleum ), since they are not interdependent with world petroleum costs and Georgian costs are in free-flight, regardless of the absence of fluctuations and shocks to the world market.

The rally participants asked Georgian President Michael Saakashvili to use his influence on the situation. They assert that the petroleum importers have conspired to earn a huge profit at the expense of the population.

“We tried to calculate petroleum costs  according to dozens of various techniques, applied in the world, but none of them  explained why the costs in our country rise, while the oil prices declined three times during the previous year  or a year and a half,” Mamuka Martashvili, one of the protest organizers, said.

Today a liter of “Regular” petroleum costs 1,7 lari, that is one dollar exactly, whereas according to all the calculations, in compliance with market prices and with a glance at taxation and transport expenses, it shouldn’t cost more than 1,3 lari. The petroleum importers association endeavors to explain this situation  by the fall of lari against the dollar. However, from the experts’ point of view, these calculations can not explain the “Georgian petroleum prices phenomenon.”

Independent expert Levan Gwinianidze expressed his frank opinion during an interview, saying “Either in Georgia, some mystic market laws work which do not work in other countries and in the world market, or there is really some  secret conspiracy which ( in defiance of the antimonopoly law) makes it possible to work miracles with petroleum costs.”

The bulk of petroleum and petrochemical is imported to Georgia from Azerbaijan and Eastern Europe. Despite the difference in transportation costs, their final price is always the same - the costs at ”Lukoil”, “Visol” and “Romepetrol” gasoline stations  are always identical, despite development on eastern and western markets and transport problems,

Protestors have not so far had an answer, neither from the authorities, nor from the association of petroleum importers. The latter confined itself to releasing a “wise” analytic article that basically said -”If the theory runs counter to the facts, so much the worse for the facts”.

However, the Georgians are rather inclined to trust common sense, so in the near future Tbilisi and other cities will see new protests.