Government caused oil price hike

The “Economist” published a chart in which they compare how the oil
prices have changed in 28 countries, compared to one year ago. In
Switzerland it has increased with 3%, in Italy with 18%, in France it
has even reduced. The differences show that governments apply different
policies that affect the oil price, in order to face the crisis, mainly
through taxes.

But what has happened in Albania? Compared to March 2011, the gasoline has increased with 16.5%, what ranks Albania on the top of this list. More than half of this price increase has been caused by the government, which established a new tax on fuels, initially with 5 ALL per liter, and then 7 ALL per liter on January, affecting all citizens.

Analysis

Since 2005, the fuel price in our market has doubled, and the Albanian government has never intervened for stopping the price increase. On the contrary, they have made the citizens’ burden heavier.

It all started with the excise, which in 2005 was at a fix level of 27 ALL per liter. Since then, the government has increased it twice, bringing it to 37 All per liter, which is the current level. This was the first step that was followed by others, always increasing the price. After the excise, the government increased the carbon tax from 1 to 3 ALL per liter, and recently they placed another circulation tax, 7 ALL per liter.

In total, the tax has increased with 25 ALL per liter, compared to 2005, without including the additional taxes that the government takes from the price increase. The argument has always been that of pollution, but this might work for as long that oil doesn’t start damaging the economy. Now that the oil price has gone to 200 ALL per liter, things might be different. In the third trimester of 2011, the industry, the sector that uses more fuel, shrank with 6% in annual terms, while agriculture increased with only 2%.

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