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Tadas Povilauskas, an economist at SEB Bank, says that retail prices tend to react quickly to fluctuations in the price of oil in Lithuania.
“Prices are reacting fast enough. Probably the price of oil has been growing steadily since the third quarter of last year and that growth has accelerated recently,” T. Povilauskas told the BNS news agency.
Price tracking portal pricer.lt Founder Arūnas Vizickas points out that there is a tendency in Lithuania for fuel prices to react quickly to higher oil prices and slower to lower prices.
But he says gas stations have felt increased competition as demand for fuel has fallen during the pandemic.
“I would see two trends: service stations that have lost turnover compared to the pre-crisis period are trying to find a way to make money, but on the other hand they face more competition in the exhausted market: less consumption, less refills, maybe even smaller amounts. That saves them major price differences, “said A. Vizickas.
Oil demand is still significantly lower than before the pandemic, but the analyst says that even with the release of quarantine restrictions and economic recovery, the market may not recover very abruptly.
“There is a pretext for the price increase, but it is possible that the market takes it like a compressed spring to consumption. In reality, people live in stress for too long and begin to get used to living more rationally, saving and increasing unemployment and uncertainty. Rational consumption will not evaporate immediately, “he said. pricer.lt guide.
Prices will be determined by the consumers themselves
The price of oil is only one of the few components of the final price of fuel for consumers; it also includes value added tax, excise duties, and refining costs.
A: Vizickas says that the price of oil is just one of the signs of rising prices; no less important is the factor of gas stations.
Made in february pricer.lt The price survey shows that the price of a liter of A95 petrol at the traditionally cheaper Lithuanian gas station Jozita costs 1.08 euros, and the most expensive, Orlen, 1.22 euros.
According to A.Vizickas, there have been months before when the price of scissors was even higher. According to him, gas stations raise prices as much as the consumers themselves allow.
“If, for example, people are willing to pay a bonus of 10 to 20 cents per liter, then, of course, gas stations will do it. If the consumer does not allow it, they will choose an alternative, the law of the market says that the gas station will have to review its limits, “he said.
Speaking about the dynamics of oil prices, T. Povilauskas says that demand is still declining, but prices have returned to the level of 70 US dollars due to the commitments made by the leaders of the OPEC + Saudi Arabia and Russia cartel to limit the oil production.
“The correlation between oil reserves and production is high, and there is a feeling that in the near future, if OPEC + adheres to fair production restrictions, in the short term it may be that $ 70 a barrel will be a normal level, “he added. the economist told BNS.
At the same time, however, he noted that when the price of oil rises, there is greater momentum to increase production and benefit from higher prices for the US shale oil industry, which generally balances the price when the price rises. production.
“Everybody understands the game: When the price of oil rises sharply, Americans with shale oil have the motivation to jump in quickly and increase oil production dramatically.” We understand that the Russians are afraid of it and the Arabs think that it will not happen so soon, ”said T. Povilauskas.
“Here’s the point: how steeply US oil companies will be able to increase shale oil production in the coming months,” he said.
