Apostolos Tomaras
In early October, the finance minister once again repeated the government’s familiar message: Cyprus has the fifth-cheapest fuel in the European Union.
Makis Keravnos has gone beyond presenting a favourable ranking. In his public statements, he also seeks political credit, attributing those prices to government measures and effectively asking people to consider how much worse things would be without them.
When a worker in Central Europe needs just 3% of their salary to fill the tank, while a Cypriot must sacrifice more than 5% for the same journey, petrol in Cyprus is hardly cheap.
The argument has some merit: Tax relief does reduce the final price. But it does not reflect people’s everyday experience. Nor does it answer the more fundamental question: After successive crises and years of government intervention, why does Cyprus remain so exposed to international price increases?
“Cheap” fuel still burns a hole in the budget
The problem goes much deeper than the price of petrol.
It concerns an economy that remains dependent on imported fuels, a society locked into private car use and a state that continues to deal mainly with the consequences of high prices, without substantially addressing what makes them so painful.
The cost of that dependence is not paid only at the pump. It spreads through businesses and services, onto supermarket shelves and, ultimately, into household budgets. Higher transport and production costs trigger a domino effect across essential goods and services.
Put simply, the EU’s fifth-cheapest petrol can also be among its most expensive in terms of the burden it places on consumers. Fuel has consequently become the biggest driver of the cost-of-living squeeze in Cyprus today.
With average prices nationwide reaching record levels — €1.759 per litre for 95-octane petrol and diesel breaking through the €2 barrier to reach €2.019, with the highest prices as much as €2.126 — households are being squeezed to the limit.
The “average wage” myth and what people can actually afford
That is why consumers in Cyprus feel they are being taken for fools when told they pay less for petrol than someone in Germany or France. And not without reason.
Official claims about “cheaper fuel than in Europe” are more than a flimsy excuse. They are an economic illusion — at best.
Comparing pump prices in euros without considering people’s real incomes makes a mockery of the comparison. A lower price means little unless it is measured against earnings.
When officials say Cyprus has cheap fuel because 95-octane unleaded costs, for example, €1.70 per litre compared with €1.95 in Germany, they make a serious economic error — or omission. They compare prices while ignoring the pockets paying for them.
Consider a 50-litre fill-up: €85 in Cyprus and €97.50 in Germany. Measured against the official average monthly take-home salaries cited for the two countries, the difference becomes clear.
In Germany, average monthly net pay is around €2,800. A €97.50 fill-up accounts for just 3.4% of a worker’s monthly income.
In Cyprus, average monthly net pay is around €1,600. An €85 fill-up takes 5.3%.
For exactly the same quantity of fuel, the Cypriot household breadwinner takes a much heavier financial hit — around 55% more relative to monthly earnings — than their German counterpart.
Using average pay as evidence that households can withstand higher prices also overlooks how earnings are distributed. High salaries in particular sectors pull up the average, which does not necessarily reflect what a typical employee earns. Median pay and the proportion of workers on low wages provide a more meaningful picture of people’s ability to cover fuel costs.
The stark reality in Statistical Service figures is that median earnings are only around €1,968 gross, or approximately €1,600 net, while 35% of employees on the island earn less than €1,500 a month.
For someone taking home €1,100 or €1,450, an €85 fill-up does not consume roughly 3% of their income, as it does for their Central European counterpart. It takes almost 6% to 8% of the money they live on.
Price increases that deliver an economic shock
Taking the comparison a step further, Eurostat’s GDP per capita measure in purchasing power standards places Cyprus noticeably below the EU average, at around 88% to 90%, while Northern European countries stand at 120% or 130%.
This means the overall cost of living — housing, food and energy — is already disproportionately high relative to wages in Cyprus.
Household budgets are also being squeezed by two other major pressures: sharply rising rents and housing costs, increasing at close to 10% annually, and hefty loan repayments resulting from elevated European Central Bank interest rates.
Against that backdrop, even an extra 5 to 10 cents per litre can leave families struggling to make ends meet.
So when Eurostat places Cyprus among the countries experiencing the sharpest monthly fuel price increases, those rises are not being absorbed by spare income.
August’s shock illustrates the point. Official figures showed Cyprus recording the EU’s fourth-highest monthly increase in petrol prices, at 6.2%, while diesel jumped by a striking 11.3%.
Those increases land on purchasing power that is already exhausted. Households are not simply living with high prices; they are being hit by repeated, severe financial shocks.
Prices rise like rockets and fall like feathers
The crucial question, of course, is whether the speed of those price changes is justified.
Fuel economists have a term for this: “rockets and feathers.”
It describes precisely what happens in Cyprus. When international oil prices rise, filling station prices shoot up like rockets, almost immediately, with the explanation that “the shipments arriving are expensive.”
When international prices fall, domestic pump prices drift down like feathers, with the explanation that “we still have stocks bought at higher prices.”
That uneven response prevents the market from smoothing out sharp price swings.
Trapped behind the wheel: The real cost of state failure
The state’s greatest failure is reflected not only in petrol prices, but in the absence of choice.
A comparison between Cyprus, Greece and the EU average would highlight this: The problem in Cyprus is not simply the price of fuel relative to Europe, but consumers’ complete dependence on driving.
In other European countries, fuel demand is “elastic.” When petrol becomes more expensive, people can leave the car at home and take the metro, a train or a reliable bus.
In Cyprus, demand is entirely inelastic. Buying a car and consuming fuel are effectively unavoidable because the state has failed to provide a decent, affordable alternative.
Cypriots do not simply pay dearly to get around. They pay the price of a transport system that obliges them to own a car, buy fuel and absorb every international price increase.
The Audit Office’s special report on public transport, released Wednesday, Oct. 14, offers a particularly revealing picture.
Despite state subsidies, the report explicitly states that taking the bus does not necessarily offer a financial advantage over driving. Following recent fare increases — including journeys costing €2.70 and travel from areas such as Latsia — the financial incentive evaporates once lost time is taken into account.
The investigation identified serious shortcomings that make passengers’ lives difficult.
Missing information: Some 55% of bus stops provide no timetable or route information whatsoever. Many lack even seats or shelters.
Unreliable services: The findings included incorrect timetables, infrequent services and serious accessibility problems, including a driver refusing to serve a passenger with a disability.
The political paradox is that the state finances a public transport system that has failed to become a sufficiently reliable alternative for a large share of the population. At the same time, it must take measures to reduce the cost of people’s dependence on private cars.
In other words, it pays to run public transport, then pays again to cushion people against the consequences of its shortcomings.
The question is not simply how much money is spent, but what that spending achieves.
For now, the clearest verdict on the existing system comes from the report’s most damning finding: 63% of participants said they would not choose to take the bus again.
