If you notice in the title “Who sets fuel prices” I’m not saying. Because there is no person or institution that sets fuel prices. Fuel prices according to a certain formula “to form”; that is, it occurs automatically.
The most determining factor in fuel price formation is undoubtedly the price of crude oil. But calculating by looking only at the price of oil “Why is the fuel rising?” or “Why not cheap” saying can be misleading. Of course, it is appropriate to look at the general trend starting from the price of crude oil, but it is not enough to look at the price of oil for daily or weekly movements.
Fuel Prices in International Markets to Watch …
Prices in Turkey are determined by prices on the fuel exchange in Genoa, Italy. When we say stock market, we usually mean stock exchanges, but of course there are commodity exchanges too …
The fuel price formation mechanism works as follows:
– Tonnes prices of diesel and gasoline are formed instantly on the stock exchange in Genoa. Of course, the price of crude oil determines the price of the product, but the supply and demand that are formed in the stock market are also very important. For example, even if the price of crude oil remains constant, if the demand for diesel is high, the price of this product increases. Or, if the diesel supply is low, the price goes up again. For example, we have all experienced that the war between Russia and Ukraine negatively impacted the supply of diesel for a period, which led to diesel prices rising faster than gasoline.
– The average of the closing price of the last five days on this stock market is converted to TL on the average of the exchange rate of the Central Bank for these five days. If the price revealed in this way is 3 percent above or below the current price, an increase or discount comes to the fore.
– In the event of an increase or discount, the ex-refinery price is changed as part of a formula. VAT and SCT are added to the ex-refinery price and the resulting price is communicated to the distribution companies.
– Distribution companies can also add their own profits and reseller profits. “advised price” and the new prices are sent to gas stations.
– The price announced by the distribution company is applied almost at the same level by the stations. There isn’t much difference between distribution companies or stations; as the profit margin is very limited, only due to the cost of transportation, the price is higher in places far from the refinery.
– In the last two days, while there was a discount on diesel, the fact that there was no change in gasoline was due to the increase in demand for gasoline on the stock exchange, and therefore in the price of gasoline. However, the price and the Central Bank rate at the time of writing this article yesterday seemed to indicate that a discount could be made on gasoline, effective as of midnight tonight.
– If there is an increase or a discount based on the price in the exchange of products in Genoa, this change becomes effective starting from midnight of the following day. As I just mentioned, if the petrol discount was finalized as of last night, that discount will take effect starting at midnight tonight.
The government does not raise
It’s easy to criticize someone for fuel increases. Or clap someone when it comes to discounts …
But first of all I must say: The government does not increase or discount the fuel. The government has no direct influence on these increases or discounts. However, this does not mean that we cannot speak of indirect responsibility, of course we can.
Indeed, there is no one to criticize or praise for the rise or fall in fuel prices. Neither the government, nor the EMRA, nor the distribution companies.
Whatever the prices in Genoa, the prices in our country increase or decrease accordingly.
As for the responsibility of the government …
Of course, the Genoa stock exchange does not work only for us, the price that is formed there is decisive for all the countries of Europe. If so, how did the fuel prices in those countries rise so little compared to ours?
The answer to this question is very simple:
“Because our currency is depreciating.”
If we hadn’t raised the exchange rate by 100 percent in the past year and hadn’t taken steps to do so, we would have been consuming fuel at nearly half today’s price. (World June 17, 2022.)
It is the government’s responsibility to raise the exchange rate.
Of course, the government can lower prices with VAT and SCT regulation.