Turkish consumers were hit by a new hike in gasoline prices late on Tuesday, only eight days after a similar increase, bringing the price per liter of gasoline to over TL 5 ($2.64), a new record.
Following Tuesday’s eight kuruş hike, the price of 95-octane unleaded gasoline reached TL 5 per liter. This means Turkey now sells the most expensive gasoline among other OECD members; the second most expensive gasoline record belongs to Norway with $2.63. Last week the price of gasoline was increased by Kr 11.The price hikes will likely take a toll on the Turkish economy, and the country’s purchasing power per capita performance is still weak. The TL 5 level has long remained a psychological barrier in markets.
The major burden on Turkish gasoline prices comes from indirect taxes, while the rest is processing, transportation and distribution shares. Before the gasoline can reach end users, it has to go through certain procedures. The imported crude oil first reaches TÜPRAŞ and then is transported by fuel distributors to pump stations, which sell the gasoline with taxes added. At each step the price of crude increases; around 2 percent is refining process, 8 percent goes to distributors and gas stations, while 65 percent is private (ÖTV) and value-added (KDV) taxes. The remaining 25 percent is the original price of imported crude. Turkish consumer unions say they will step up calls on the government to revise this pricing mechanism and cut taxes.
Meanwhile, Energy Minister Taner Yıldız stressed that petroleum has an automated pricing mechanism and if financial regulations need to be made, the Ministry of Finance is the address to do so. “Turkey buys the petroleum with dollar and sells it in Turkish lira, meaning that the price is prone to negative effects of foreign currency exchanges as well as rises in crude oil prices.
Also commenting on the issue on Wednesday in İstanbul, Deputy Prime Minister Ali Babacan also blamed “international developments” for high gasoline prices in Turkey. The price of oil remained near $106 a barrel on Wednesday as investors awaited a report on US crude inventories and the Federal Reserve chairman’s congressional testimony.