We ever longed for price competition. We dreamed of a petrol price competition, that the fierce competition will bring useful turns for us customers. Let’s say they offer cheaper petrol and diesel at this or that company than they would at this year. And here it is, the price competition!
Yes, there is competition. Icipici, it’s true, but it’s already there. We just can’t be happy for him anymore. At these fuel prices, let’s face it, it doesn’t divide or multiply that it’s 50 pounds cheaper or just more expensive per liter. That is true today, and it will certainly be true tomorrow, but as for tomorrow…
The development of petrol and diesel prices, and this is not the first time described, is only seemingly in line with world market prices, that is, the price of crude oil per barrel. Although the intellect dictates, this must be the price-determining aspect. It’s not. It can be said that the price of “raw material” is an almost insignificant factor in the price of finished fuel. More important is the development of the cost of production, and even more important is the item that can be defined under the heading “tax”. The latter, according to bad languages and more moral experts, also affects the item “production costs”.
Here and now, the term “influence” is not used in its traditional, but rather in its malicious version, i.e., the aforementioned “bad languages” whisper about price manipulation. Claiming that if Mol Rt. Invoiced the real production costs, the price of petrol would creep above the Austrian standard, which would also mean the end of the Hungarian refineries. Who, which company would buy petrol and diesel at home if they got it “out there” cheaper? Of course, this is not so simple, as fuel prices may even rise slightly above Austrian prices, and it will still be worth buying from domestic sources, for example because they would lose the advantage they gained in purchase price in terms of transport costs, but it is basically true: for a domestic producer, Austrian prices may be the ceiling.
What has not been discussed yet is the tax content. Although it has been a good year since we last saw comparative data, and in a year the “outdoor” and domestic proportions may have changed, it is basically true that we are somewhere in the European “leading edge” in terms of the tax content of fuel prices. In Hungary, the price is approx. The tax rate is 75 to 78 percent, higher in Germany (tax increased due to reunification costs) and Italy, where more than 90 percent of the item in the price of fuel is taxed.
After that, the question of why there is no real price competition in the fuel market to date is not too difficult to answer. In principle, this “commodity” falls into the free price category, so distributors should not complain, it is up to them to decide how much benefit petrol and diesel delivery brings, contrary to the principles, we know that in practice this is not true for several reasons. This is not true first of all because fuel distribution requires a serious background (transportation, storage, construction, maintenance, operation of the filling station network) and at the same time a lot of long-term profitable investments. Let’s say in Hungarian: the entrepreneur’s money lies in it for a long time, while he can slowly get it back. A large investment requires capital-intensive companies, and these, let us not admire, are mostly foreign companies. They are those who can stand for years, that their investment does not bring a good return, so they have already appeared to us because they trust the expected return in 8-10 years. However, even these “big ones” do not undertake to pay regularly for fuel distribution. It is true that if prices were reduced, their turnover would increase, but as the margin (due to the burdens already listed) is minimal, just as it covers the reservation, and it would cover this even with high turnover, they cannot afford a serious price reduction.
The other possible way is to raise the margin, and from that it could be released, competition between companies could be created. However, a price increase (because that would be the consequence of the margin increase) would immediately bring its own “benefit”, a significant reduction in turnover. While today’s traffic is just as acceptable. It can be said with little courage: today there are no conditions for price increases or price reductions, and companies are neither able nor willing to do so and want to move.
STILL SPECIAL PRICES!
Once we have duly explained why price competition cannot develop in the fuel market, we can be satisfied that there is a price difference despite the arguments! True, it is insignificant after all, but it is. Shell, then Aral, and slowly all companies, began to lay the groundwork for individual pricing policy. Considering many aspects, their wells offer petrol and diesel at a higher price than the recommended prices of Mol Rt., In other cases at a lower price. Aral, for example, costs 50 shillers more for 92, and less for unleaded 95 octane gasoline. If we think logically about this solution, we need to realize that they are pretty much “at our money,” but it doesn’t matter how. This price scheme encourages the consumption of less leaded and more unleaded fuel. If this step is only useful in environmental terms, we can already be happy.
Less another form of price competition, the fact that more and more entrepreneurs are “adept” – especially with diesel. Everyone is happy to save some of the price of fuel. It is a great feeling to discover a filling station where diesel is offered for 25 HUF instead of 45 HUF. It’s just not certain that a liquid that can actually be used as fuel gets into the tank. Recently, one of my acquaintances saved many, many forints in this way; firstly, by paying twenty times less per liter, and secondly, by not having to refuel at all for a good time now because he is unable to drive a broken engine.
The case raises many questions to which we seek to answer. The first and most important thing right away is: how and from whom can a deceived car get compensation? In principle, from the owner of the filling station, however, it does not, of course, acknowledge that he bought a portion of diesel containing water in a third. In principle, it would be obliged to take a sample from the well’s diesel tank and inspect it with the competent authority, but it does not. The injured motorist will not allow this either, even if he agrees to order the test at his own expense. You can ask the company that supplies diesel to check, but why, when – for that much – no official company can deliver. There would be the competent local government, but the local government is not competent to do so. The tax authority would remain (since no penny tax of the HUF 25 diesel flows into the state coffers, ie this is a typical case of tax fraud), but the tax office does not have such a control apparatus either. And finally, it turns out that the ‘trader’ in question never sold diesel, only fuel oil was available from him. Prove the opposite, who knows.
So let’s be careful. Nice thing, it is gratifying that there is already trace of price competition, but for the above reasons, this competition can only cover minimal price differences. If the difference is too great, there is something wrong with the fuel quality…
György Tóth Jr.
Photo: László L. Szabó
Source: Autó-Motor by www.automotor.hu.
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