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21 July, 2024
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Fuel prices surge, electricity rates hold steady

Rising costs at the pump and stable kilowatt-hour rates impacting consumers

Maria Eracleous

Maria Eracleous

Fuel prices are set to rise by 2-2.5 cents per liter for diesel and slightly less for unleaded gasoline, effective today at petrol stations. This increase is a response to the uptick in crude oil prices, which currently hovers around $90 per barrel. George Petrou, the former president of the OEB and current president of Staroil, anticipates an upward trend in prices due to reduced production from OPEC countries and Saudi Arabia's recent 1 million barrel oil production cut. Petrou referenced Goldman Sachs estimates, suggesting that oil prices could surpass $100 and potentially reach $107 per barrel next year if production cuts persist. He further explained that a $10 increase in feedstock prices translates to an approximately 7-cent per liter rise in the retail price of motor fuels.

It's important to note that Cyprus imports refined petroleum products, and their prices are influenced by fluctuations in raw material costs. As of September 4, the average retail prices in Cyprus stood at EUR 1,576 per liter for 95-octane unleaded and EUR 1,645 per liter for diesel. However, as of noon yesterday, the average price of 95-octane unleaded fuel across Cyprus recorded a new increase, reaching 1,584 euros per liter. Diesel oil prices also saw a 2-cent increase over a week, with average prices reaching 1.666 euros per liter, and further increases are expected starting tomorrow. Since the reintroduction of excise duty on fuel on July 1, it is estimated that the cost of refueling has risen by around 22 cents per liter compared to current prices.

Less fuel

According to the results of the 4th wave of the K Trends survey, 10% of consumers get fuel from the occupied areas.

Rising fuel prices inevitably impact consumer behavior, leading many to curtail their fuel consumption. Petrol station owners report a decreasing number of customers filling up their car tanks, with most opting for smaller refills ranging from €10 to €30. Furthermore, according to KTrends' 4th wave of research conducted for the June-July 2023 period, 40% of consumers are actively trying to limit their travel due to fuel price increases. Additionally, 10% of respondents choose to buy fuel from petrol stations in the occupied areas.

Data from the Statistical Service and the latest bulletin on sales and stocks of petroleum products support these findings. Sales of diesel decreased by 8.7% in July 2023 compared to June 2023, while gasoline sales declined by 1.8%. However, with the return to work after the summer holidays and the reopening of schools, it is expected that motor fuel sales will rebound, along with increased traffic on the roads.

Restrictions on electricity

Regarding electricity consumption, the KTrends survey revealed that consumers are also making efforts to reduce their electricity usage in response to rising electricity prices for the June-July period. Nearly seven out of ten respondents have restricted their electricity consumption to some degree, with 16% significantly limiting usage, 24% moderately, and 25% slightly. In contrast, 35% continue to consume electricity without restrictions. September bills are expected to be higher, particularly due to the increased use of air conditioners. However, lower consumption is anticipated in October and November due to milder temperatures, resulting in lower costs.

How much is a kilowatt per hour

The cost of a kilowatt-hour remains stable, at least for now. According to Christina Papadopoulou, the spokesperson for the Public Power Corporation, the price of a kilowatt-hour remains unchanged from August and stands at 34 cents per kilowatt-hour, including VAT. In practical terms, this means that a household with a consumption of 800 kilowatt-hours (bimonthly bill) for September will be billed approximately 270 euros. It's important to note that the average household consumption is 800 kWh, though this can vary depending on individual energy usage.

However, it's worth mentioning that the termination of the state subsidy has led to a 28% increase in electricity bills. Papadopoulou commented on the upward trend in raw material costs, stating that its impact on electricity bills will be felt later due to the maintenance of fuel stocks. She also highlighted the option for payment facilities and the monthly payment plan. Under this plan, consumers pay a fixed installment each month based on their consumption from the previous twelve months at the sub-station. This amount is regularly adjusted to account for changes in fuel prices and the customer's consumption.

Alternative means of transportation

The rising cost of fuel is a factor that may influence drivers to reduce their travel or consider alternative means of transport. Another contributing factor is the traffic congestion in city centers, especially during peak hours from 7-9 in the morning and 3-6 in the afternoon. Recently, a park-and-ride scheme has been implemented, primarily benefiting public and private employees. Additionally, in the coming months, bus lines are expected to be established to serve students traveling to and from remote areas.

The Minister of Transport, speaking to "SPOR FM 95.0" and the "DIASPORA NEWS" program, has expressed the goal of increasing bus ridership. Currently, only 3% of commuters use buses, and initiatives are underway to improve this situation before the next academic year.

[This article has been translated from its Greek original]

Cyprus  |  fuel  |  energy  |  economy

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