Costs rise along fuel supply chain

IOBE study shows that structural rigidities and red tape hurt competitiveness and lead to higher prices

Greece’s fuel market supply chain is weighed down by structural problems and red tape, resulting in Greek drivers being hit with some of the most expensive gas prices in the European Union, according to the Foundation for Economic and Industrial Research (IOBE).

IOBE, a nonprofit research group, said in a report yesterday that a lack of land-planning rules dictating where fuel storage facilities can be built and time-consuming customs procedures combine to create higher costs for motorists.

“Some of these problems do not have any direct impact on the way prices are decided in the short term but distort the market, limiting competition and pushing prices away from competitive levels,” IOBE said.

Greece’s lack of a land-zoning plan allows local communities to block the construction of storage units, preventing any efficient fuel distribution system and the lowering of costs, the research group said.

Additionally, bureaucratic customs procedures and a minimal level of automated steps limit the possible fuel supply after public sector working hours.

“Modernizing customs procedures and the electronic monitoring of fuel... is expected to bring greater flexibility in fuel supply with multiple benefits for the community,” IOBE added.

Pre-tax retail fuel prices in Greece are above the European Union average and levels seen in Spain and Portugal, according to the research group. In a bid to boost competition in the sector, the Development Ministry announced last month that self-service gas stations and automated gasoline pumps will soon be introduced to the Greek market in order to boost competition. IOBE welcomed the move, saying that Greece is the only country in the European Union where there are limits on the operating hours of gas stations.