Turkish diesel price under pressure

The tax buffer for diesel prices in Turkey has been used up. Since March 20, the special consumption tax (STT) on diesel has been zero - for the first time, price increases are being passed on to consumers unchecked. The background to this is the sharp rise in oil prices and refinery margins. Just a few days after the tax adjustment, a further price increase of 6.6 lira per liter was announced. The tax mechanism previously used to cushion costs is therefore no longer effective. At the beginning of March, the government had still tried to dampen the price pressure via the so-called "echelle-mobile" system. This meant that 75% of price increases were absorbed by lower taxes. However, this leeway has now been exhausted. Before the adjustment, the diesel tax was still at 13.90 lira per liter. With the complete removal of this buffer, international price movements are now reaching the pumps directly. Prices are rising rapidly The consequences are clear: since the end of February, diesel has become 57 percent more expensive in Turkey, and petrol 37 percent more expensive. There is no relief in sight so far, as both crude oil prices and refinery margins remain high. Tweet from @e507: Why are diesel prices rising faster than gasoline prices? Gasoline margins are rising more slowly because Europe and Turkey are net exporters of gasoline. Pricing follows a complex formula of international product prices, exchange rate, taxes and margins. In addition to the now abolished excise duty, VAT in particular remains - a point that critics have long described as a hidden double burden. Table: Calculation of fuel prices in Turkey. Without the current tax mechanism, diesel would be even more expensive: according to experts, the price per liter would currently be around 16.7 lira higher. Despite this reduction, the pressure on consumers and the economy is increasing. This is because fuels are a key cost factor in Turkey - from transportation and production to food. The development indicates that the price shock will increasingly be reflected in inflation. No rapid relief is currently foreseeable. Table: Tax burden on fuel prices in Turkey (as of March 21). The post Turkish diesel price under pressure appeared first on ostwirtschaft.de.