ECONOMY

Government mulls putting caps on rising fuel prices

Record-breaking oil prices may force the government to soon abandon its stance that the «unhindered operation of competition» is the answer to all problems and impose price caps. Oil prices reached 13-year records in international markets yesterday, while, in Greece, gasoline prices rose by about 1.5 cents, to 82 cents a liter for unleaded and 86.8 cents per liter for leaded gasoline. «If necessary, we will adopt measures similar to those adopted during the 2000 crisis,» Deputy Development Minister Giorgos Salagoudis told reporters yesterday. The measures he was talking about include the imposition of price ceilings on fuel, a measure provided for by law. It is not only the gasoline prices themselves that worry the government but the spillover effect on the prices of other goods and services. Few, if any, sectors of the economy are unaffected by fuel prices and the specter of runaway inflation is haunting the government. April consumer price index figures have not been officially published yet, but it is known that the annual rate of inflation has accelerated from the 2.7 percent registered in March. Estimates for April’s figure range from 2.9 to 3.2 percent. According to sources, the government will wait to monitor fuel price developments until the end of May in order to decide whether to impose a price ceiling or not. One more reason the government may decide to impose a ceiling is to prevent further fuel price hikes in the summer season, when demand will rise steeply, partly because of the Athens Olympics. The government wants at all costs to avoid the image of the Olympics host country resorting to widespread price gouging. Salagoudis has, for the time being, excluded an eventual meeting of the ministry’s Crisis Management Commission. Next week, the Parliament’s standing committee on production and trade will meet to consider the situation at the request of Development Minister Dimitris Sioufas. Opposition Socialist MPs have already urged the government to use all means at its disposal to control fuel prices. In a question submitted yesterday by a number of former Socialist ministers, the government is accused of «immobility and general references to the functioning of the market.» «Given the international situation and with profiteering evident in the Greek market, the government appears unwilling to make use of European regulations concerning the oil market and also Greek law to prevent a price explosion,» the Socialist MPs say. They further allege that the profit margins of fuel trading companies have doubled. In reply, government spokesman Theodoros Roussopoulos said that fuel price hikes in Greece are much less than abroad, attributing this to «a policy that produces results.» However, the means used by the government so far, such as an intervention by the Competition Commission, intensification of market inspections and the use of state refineries to keep a lid on prices, have proven insufficient in dealing with the gasoline hikes. Yesterday, oil almost reached $40 per barrel on international markets. In New York, the price of crude oil shot up to $39.97 per barrel before settling at $39.20. In London, a barrel of Brent was selling at midday for $37.20 before settling at $36.51.