Monday, August 29, 2005

Cost of petrol likely to increase soon :: GN

Quote:
While official comment was not available, industry sources said a decision will be taken jointly by all the retail players within days. Retail petrol prices were last increased in April last year, from Dh4 per gallon to Dh4.75. Retailers have for several years been urging realistic retail prices that reflect international crude prices. According to Hussain Sultan, Enoc group chief executive, UAE-based retailers have been suffering losses for several years.
Retail prices for petrol in the UAE do not reflect international crude prices; they do not move with crude prices and the price of petrol relative to crude is low compared to that relative price in non oil-rich countries (taxes are not the explanation because I am referring to the price of petrol net of taxes). What keeps the price low is that at least some retail players choose to sell at low prices because their government owners wish to keep the price of petrol low to disburse some benefits to the population. Why other retailers would follow suit is a matter of speculation. Perhaps it is tautological to say so, but they appear to stay in the market because they believe that through an agreement amongst the small number of retailers price will be increased so that economic profits can be earned in the future. For this expected future gain they maintain their system of retail outlets.

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2 Comments:

Anonymous Anonymous said...

the gas price is set in abu dhabi. the retailers have no choice at what price they sell.

3:42 PM  
Blogger Keefieboy said...

All petrol retailers in the UAE are gubment-owned (Eppco, Enoc, Emarat, Adnoc) since Caltex pulled out. They all operate at a loss, because the Gubment sets the prices.

10:06 PM  

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