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Georgian Drivers Boycott Oil Companies Over Rising Fuel Prices

Drivers have started to boycott some of the largest oil importing companies in the country – Wissol Petroleum and Gulf Georgia – over the latest spike in fuel prices in late October and early November.

According to the National Statistics Office, in October, petrol prices increased by 43% compared to the same period last year, while prices for diesel grew by 35%.

The frustrated car-owners turned to Facebook to create the campaign to “regulate fuel prices in Georgia” and bring them to a level “acceptable for the population amid the crisis induced by the Coronavirus pandemic.” The private Facebook group Reject Fuel Prices, created on November 3, attracted over 130,000 members in less than a week.

The campaign organizers announced a rally on November 14 along Agmashenebeli Alley, a major road in northwest Tbilisi. The goal, they say, is to “show our power to the people and to those higher up in the government echelon.”

Boycott Against Wissol Petroleum

The organizers – some 12 accounts currently administering the Facebook group – targeted Wissol Petroleum from the onset, citing its biggest share in Georgia’s oil imports as the main reason behind the calls to its boycott in a November 5 post.

“Targeting all of them [at once] will not yield results,” one of the organizers said in a November 8 video address, explaining why they had picked Wissol as the target.

Over the past year, the Wissol Petroleum increased prices on average by 75 tetri (24 cents) per liter for its diesel products and 83 tetri (26 cents) per liter petrol. 

Currently, the price for Eco Super petrol in Wissol stands at GEL 3.36 (USD 1.06), while Euro Regular costs GEL 3.14 (USD 1.0). The prices stood at GEL 3.25 and GEL 3.03 in mid-October.

Wissol Group President Soso Pkhakadze’s November 4 remarks with media that oil prices “should be even higher” added fuel on the fire.

“Georgia is a fuel importer, and, unfortunately, [the rising prices] are in direct proportion to the increase in prices in international markets,” Phkhakadze said. “We try our best not to completely pass [the burden] on the customer.”

Phkhakadze’s comments seem to have stirred ire in the group whose members have been sharing pictures of deserted Wissol stations, claiming their boycott has been working.

However, the executive director of Wissol Petroleum, Vasil Khorava, told TV Pirveli today the company has maintained its sales volume. At the same time, Khorava stressed the company could not dismiss the public opinion, expressing worries over the reputational damage. 

Khorava said fuel prices are determined by three main factors: crude oil prices, taxes and logistics expenses. He also referred to rising inflation and pointed out that it has affected not only fuel costs, but other commodities and the service sector as well. 

Boycott Against Gulf Georgia

Expressing doubts that the government or private companies might be waiting for the protest to wind down, the organizers called on November 8 to also boycott Gulf Georgia for being “the undisputed leader in high prices in Georgia.”

Gulf Georgia increased prices on its petrol products on average by 85 tetri (27 cents) per liter and on its diesel products by 72 tetri (23 cents) per liter over the course of 2021. In October-November the company increased prices on petrol on average by 9 tetri (2.8 cents), and on diesel by 10 tetri (3.2 cents) from the price set on August 26.

Currently, in Gulf Georgia, since November 4, G-Force Super petrol costs GEL 3.37 (1.07 USD), with the price being GEL 3.25 in late August and GEL 2.99 in early May. For Euro Regular, the current price is at GEL 3.09 (USD 0.98), while it cost GEL 2.99 in mid-August and 2.65 in mid-April.

While the organizers have only called to boycott the two companies so far, there seems to be a widespeared anger against all branded petrol stations among the Facebook group members. The other oil giant names in Georgia include Socar Georgia, Rompetrol, Lukoil and BP.

Many have urged their fellow drivers to ditch the big names and switch to non-branded fuel at least temporarily.

Civil.ge reached out to the Gulf Georgia, but the company declined to comment.

Oil Importers Retort

The Union of Importers of Oil Products responded today, criticizing “the artificially created ado over fuel prices.” They said the social media campaign against the oil sector is “detrimental for the industry’s healthy development, the strengthening of competition and the creation of a fair business environment” in Georgia.

“These actions unequivocally harm the country’s economy,” the Union asserted.

Noting the rising international crude oil prices, the Union explained that it was caused by increased demand in the global market and supply deficits amid OPEC+ politics to place quotas on oil production.

The importers stressed that from September 1, 2021, fuel prices at filling stations have increased by an average of 10-15 tetri (3.2-4.7 cents) a liter (3-4%).

The Union suggested “floating” excise tax as “the only theoretical lever that can stabilize the fuel prices” by adjusting the tax in accordance with given prices for oil products.

Other Fuel Price Determinants

In addition to international crude oil prices, national currency exchange rate and excise tax are often cited as the determinants of the price tag in Georgia.

The excise tax on fuel increased in 2017, with an excise on 1 ton of petroleum rising from GEL 250 to GEL 500; 1 ton of diesel fuel – from GEL 150 to 400; 1000 m3 of natural gas used as a fuel – from GEL 80 to GEL 200; and motor oils – from GEL 400 to 800.

Some protesters in the Facebook group have also lamented the increased tax and the government’s role – and at times the lack thereof – in the soaring prices.

With regards to the national currency exchange rate, the rate of Georgian Lari against the US Dollar has been volatile throughout the year. On November 10, 2020, on Bloomberg, 1 USD was trading at GEL 3.29, with Georgian Lari continuing to depriciate, with the lowest of the year standing at 3.45 on April 21, 2021.

Since mid-May however, Lari started to appreciate against US Dollar, and rather stabilized since June, with the exchange rate today standing at 3.16 on Bloomberg.

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This post is also available in: ქართული (Georgian)

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