While the barrel price of Brent oil has experienced the biggest drop in the last year, what is the reason why there is no similar reduction in gasoline and diesel prices in our country?
In the past year, there has been a serious increase in oil prices in Turkey and in the world. As you know, the Russia-Ukraine war created an energy crisis. Every development in this regard, directly affected oil prices.
In fact, we have been seeing the news of a fuel hike or discount almost every day for a long time. because oil prices fluctuate. So, last June brent oil with a barrel price of 112 dollars price as of today It’s down to $81.
Prices fluctuate constantly in our country, but…
Unfortunately, the size of this fluctuation is Brent is not at the same rate as the oil price. Let’s explain by going through the example we gave above;
In June, we mentioned that the price of brent oil saw 112 dollars. Now we said it was 81 dollars. So on these two dates? What are the petrol and diesel prices in our country? Let’s see together.
- 8 June 2022 brent oil price: 112.29 dollars/ Istanbul diesel liter price: 25.94 TL / Istanbul gasoline liter price: 26.24 TL
- 28 November 2022 brent oil price: 81.06 dollars/ Istanbul diesel price: 23.84 TL / Istanbul gasoline price: 20.16 TL
As can be seen, the price of brent oil Despite the $30 drop The decrease in gasoline and diesel prices is between 2 liras and 6 liras.
Let’s start with the first option that comes to mind; currency factor
dollar rate on June 8 It was at the level of 16.90 TL. When we come to 28 November It has risen to the level of 18.63 TL. As a matter of fact, the decline in brent oil prices in dollar terms cannot affect us in the same way.
However, the increase of approximately two liras in the exchange rate made the difference so large. still can’t explain it alone. So what other reasons could there be?
Let’s look at how gasoline and diesel prices are calculated in Turkey
According to the Petroleum and LPG Market Pricing Report of the Energy Market Regulatory Authority, in our country Gasoline and diesel pricing is calculated with the following formula;
- Product price + Wholesaler margin + Revenue share + Distributor and dealer margin total + Total tax = Final selling price
But this formula is almost no unit is fixed. The wholesaler margin, distributor and dealer margin, and taxes are constantly changing. Moreover, this change does not proceed with a standard linearity. In a month when the product price increases, the wholesaler margin may increase while the total of distributor and dealer margins decreases.
As you can see in the two tables below, there are non-linear changes in all units between the previous and next month.
*Tables From EMRA’s Petroleum and LPG Market Pricing June and October reports taken.
In the June period, when the product price is higher, the tax and income share is calculated as 24.60%.
EMRA’s note: In June, the final liter price of 95 octane unleaded gasoline, which was 27,103 TL/lt on average, Tax and income share of 24.60%It is seen that 66.22% of it consists of product cost and 9.18% of it consists of gross profit margin of companies operating in the market.
In the October period, when the product price was lower, the share of tax and income increased to 27.67%.
EMRA’s note: In October, the final liter price of 95 octane unleaded gasoline, which is 20,412 TL/lt on average, Tax and income share of 27.67%It is seen that 62.51% of it consists of product cost and 9.82% of it consists of gross profit margin of companies operating in the market.
What are the tax rates on gasoline and diesel? How can the rate change be explained?
There is a fixed 18% VAT on gasoline and diesel. However There is no progress with a fixed tax rate for SCT. According to the list of Special Consumption Tax Amounts and Rates published by the Revenue Administration, SCT is at the level of 2.68 TL, In diesel, this figure is 2.05 TL.
But the amount of SCT It can be arranged instantly by presidential decision. In some cases Since the SCT increase was realized as much as the discount rate There are even scenarios where the discounts are not reflected in the pump prices at all.
As a result…
Fuel prices in our country are affected by the exchange rate, taxes and profit margins of companies. This too fuel prices that are not dependent only on brent oil prices. It causes it not to fall at the same rate after the decrease.
Sources: Revenue Administration, EMRA Petroleum and LPG Market Pricing Report – June, EMRA Petroleum and LPG Market Pricing Report – October, Bloomberg Brent Oil Price Chart, Bloomberg Dollar Rate Chart