Fuel market developments

Although Romania has the third lowest wage in the European Union (EU), according to data published by Eurostat in February, prices at which fuels are sold are among the highest in the Union. It is followed by Bulgaria and Poland, the latter being a special case, which could represent a model for the Government in Bucharest.

 

At the end of March, the average price, at EU level, was EUR 1.35/liter for gasoline (Euro 95) and EUR 1.25/liter for diesel. In Romania, they were around EUR 1.13/liter and EUR 1.15/liter respectively. The European statistics show that we have prices below the European average, but relative to the minimum wage things appear in a different light.

At the European Union level, of the 28 Member States (including the UK), in 22 countries the minimum wage is regulated.

In Romania, this net salary is EUR 251, thus holding the penultimate position and surpassing only Bulgaria, where the minimum wage is EUR 202. Related to the number of full tanks of gasoline (40 liters) that a Romanian can make compared to the inhabitants of other EU countries, we notice that our situation is not good at all.

 

The largest number of full tanks

In Ireland, country that has a minimum net wage of EUR 1,509, the largest in the EU, gasoline price at the end of March was EUR 1.36/liter, and for diesel – EUR 1.28/liter. Thus, from the minimum wage in Ireland one can monthly get 27.7 full tanks of gasoline and 26.5 full tanks of diesel.

In turn, a Romanian can only afford from the minimum wage approximately 5.5 full tanks of gasoline and 5.45 full tanks of diesel.

The largest number of full tanks from the minimum net wage can be bought in Luxembourg, country with the largest GDP per capita in Europe. Here, the minimum net wage is EUR 1,162, and a liter of gasoline costs almost as much as in Romania, and diesel is even slightly cheaper. Thus, at EUR 1.16/liter of gasoline, 25.5 full tanks can be bought in Luxembourg, and at a price of EUR 1.03/liter of diesel – 28 full tanks.

 

Comparison with former communist countries

If we relate to the states of the former communist bloc, we notice that relative to the minimum net income the inhabitants of these countries can afford more full tanks of fuel than Romanians, even if a liter of gasoline and diesel is slightly more expensive.

In Estonia for example, at a minimum wage of EUR 482, one can make approximately 9.5 full tanks of gasoline and as many of diesel, in conditions in which gasoline costs at the pump EUR 1.28/liter and diesel – EUR 1.26/liter.

In Croatia, with a minimum wage of EUR 370, one can buy about seven full tanks of gasoline and almost eight of diesel at a price of EUR 1.27/liter of gasoline and EUR 1.21/liter of diesel.

 

Taxes, lower than EU average

At the end of March, the European average of Euro 95 gasoline price without taxes was EUR 0.50/liter, while in Romania the price was EUR 0.53/liter. The fact that the price without taxes in Romania is higher than that of the EU average and the price with taxes is lower, according to the same European statistics from the end of March, shows that the level of taxation is relatively low in Romania compared to other countries. Thus, the price of gasoline at the pump with taxes included was EUR 1.13/liter, and without taxes – EUR 0.53/liter, which means that the Romanian state charges EUR 0.6/liter sold. In percentages, taxes account for 46.9% of the price displayed at the pump, a percentage lower than the European average.

In Luxembourg, the price of gasoline including taxes is EUR 1.14/liter and EUR 0.51/liter without taxes, which means that the state charges 55.26%.

In Ireland, at a price including taxes of EUR 1.37/liter of gasoline, without taxes the price is EUR 0.505/liter, the state thus withholding 63.5%. The same situation is recorded in the Netherlands, where the state’s share of the price per liter of gasoline is 68.38%.

 

Poland, a good example

A special situation, which should be food for thought for authorities in Bucharest, is recorded in Poland. Although the country has no oil reserves, unlike Romania, and with a minimum net wage of EUR 352, Poles can afford eight full tanks of gasoline per month and as many of diesel. Moreover, in this country fuels at the pump are cheaper than in Romania, EUR 1.11/liter of gasoline and EUR 1.09/liter of diesel, and the state withholds in the form of taxes and duties almost 55% of the price of gasoline and just over 41% of the price of diesel.

 

How did the fuel market evolve in 2017

The price without taxes of fuels in Romania was higher last year than the average at EU level, while taxes applied by the state were among the lowest in the Community area, according to data from the European Commission. At the end of December, the price per liter of gasoline, without taxes, was in Romania EUR 0.511, while the EU average was EUR 0.508. The same happened with diesel, where the price excluding taxes is EUR 0.560/liter and the EU average is EUR 0.542/liter. Compared to the beginning of 2017, the price excluding taxes of fuels increased more in Romania than the EU average. Thus, in the case of gasoline, prices excluding taxes in Romania were higher by 1.1%, while the EU average fell by 1%. At the same time, for diesel prices excluding taxes in Romania increased by 5% and the EU average by only 1.1%. If we add the taxes, the final price at the pump was EUR 1.117/liter for gasoline and EUR 1.140/liter for diesel.

Reported to these final prices, Romania was below the European average, which was EUR 1.363/liter for gasoline and EUR 1.249/liter for diesel.

 

Top 10 countries that can afford the largest number of full tanks of gasoline from the minimum net wage
Country	Minimum wage (EUR)	Price	Number of full tanks
Ireland	1,509	1.36	27.7
Luxembourg	1,162	1.14	25.48
France	1,401	1.46	24
The UK	1,261	1.36	23.2
The Netherlands	1,430	1.55	23
Belgium	1,216	1.33	22.8
Germany	1,102	1.31	21
Spain	733	1.23	14.9
Malta	673	1.31	12.8
Slovenia	642	1.28	12.5
In Romania, with a minimum wage of EUR 251, one can only afford approximately 5.5 full tanks of gasoline and 5.45 full tanks of diesel.