Despite the fact that in an election year politicians want to please voters, the government should not attempt to regulate fuel prices right now. This is the opinion of experts consulted by Latvian Radio journalists.
Former chairman of the Association of Fuel Traders Ojars Karchevskis explained that fuel prices directly depend on the situation in the exchanges, regardless of when it was purchased and brought to Latvia. At the same time, traders raised prices relatively gradually over the course of a week, rather than overnight. "We are already dependent on the rising exchange prices resulting from this war. Meanwhile, there is a greater shortage of diesel fuel, and as a consequence, gasoline has increased in price by only six cents at gas stations and by 11 cents on the exchange, while diesel fuel has risen by 30 cents at gas stations and by 40 cents on the exchange," Karchevskis said.
After the statement by the Minister of Economics, the policy of the Union of Greens and Farmers Viktor Valainis that Latvia could release up to 40,000 tons of oil reserves onto the market, nothing will change directly for our consumers. Such actions would be quite symbolic for our market, as fuel reserves in Latvia are sufficient and stable. There are currently no significant risks to supplies, and the International Energy Agency has called for directing reserves to the market in order to reduce the fuel deficit globally. Therefore, Valainis does not hide that injecting reserves into the market would not lower prices at all. "I think we should not do anything," commented Luminor Bank economist Peteris Strautins.
He urges not to interfere with fuel price regulation and reminds that after Russia's full-scale invasion of Ukraine, fuel prices increased more, while people's salaries at that time were only two-thirds of what they are now. "I think it would be a deception, an illusion, if the government promised to protect the residents of Latvia from absolutely all adverse turns of fate now and in the future. This is simply impossible, at least due to the aging population and other processes. During the pandemic, a generous tradition of distributing money developed - a kind of competition among politicians. But this is not long-term - it is fiscally unsustainable and sends the wrong signal. It would be a disservice to the residents of Latvia," Strautins commented.
