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| Protection against price explosions 14/04/2011 |
| (2011-04-14) |
| Last updated: 2011-04-15 14:55 EET |
While criticized of tolerating ever-increasing fuel prices on account of alleged high budget revenues, the Romanian Government is left with basically no economic instruments available for intervening on the market. Consequently, one drastic measure is being taken into consideration – freezing gas prices.
Romanian legislation would allow this, but only in exceptional cases. The fact that a liter of the most expensive type of gasoline now costs over 6 lei, the equivalent of some 1.5 euros, combined with a 30 percent rise in fuel prices over the past two years, does not necessarily mean an exceptional situation should be declared. On the other hand, the said law was adopted prior to Romania’s accession to the European Union. That is why PM Emil Boc has asked Romania’s Competition Council and Department for European Affairs to check whether or not European legislation allows for fuel prices to be frozen.
Boc said this: “This article was adopted before Romania joined the EU. If the answer is a positive one, we will find a solution.”
The Competition Council is also pushing ahead with its investigation on the formation of prices on the Romanian market. Results will be known by mid-year. In January, the National Agency for Fiscal Administration compiled a report showing that retail gas prices were raised unjustifiably throughout 2010. According to the “Fisc”, the Romanian revenue authority, the evolution of oil prices on the stock exchange, currency exchange rates and state-imposed taxes did not determine retail prices, as claimed by fuel companies.
While most of them have reported losses, some believe they might have camouflaged actual profits. Fuel prices are a concern not only at national and regional level. In Brussels, the European Commission has proposed modifying taxation in the field of energy. According to this initiative, the energy generated by fuel, rather than its volume, would decide tax levels. The aim is said to be promoting green energy efficiency and consumption, without distorting competition on the single market.
The new system would be put into effect progressively, and would instate higher taxes for diesel and lower ones for gasoline. Countries like Germany, France and the UK have already expressed their disapproval of this measure, the first even emphatically. They fear that the new form of taxation could affect diesel vehicle sales. The European Commission, on the other hand, claims their fears are unjustified.
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