The country’s oil refineries, which are directly linked to the global oil market, are having to manage an unprecedented situation as a result of the volatility created by the slump in demand due to travel restrictions enforced around the world to contain Covid-19 and which sector officials describe to Kathimerini as the absolute imbalance of supply and demand.
The fact that Greek refineries are not active in the area of extracting hydrocarbons – which has suffered the greatest pressure – has considerably limited the consequences of the twin crises of low rates and the reduction in demand. Therefore Hellenic Petroleum and Motor Oil are continuing to operate at almost normal rates, making the most of the ample storage space they have to keep crude oil and fuel products purchased at low prices. There will also be a significant impact on the valuation of reserves, but this is reflected as an accounting loss.
It must be noted that refinery companies are benefiting significantly from the lower prices, as they require less working capital to acquire crude oil. Consumers also benefit, although the high share of taxes and levies on retail prices do not allow for a significant decline in the latter. Even so, the price of unleaded gasoline currently averages at 1.30 euros per liter while the figure for heating oil is 79 cents per liter. On Sunday it was announced that the sale period for heating oil will be extended until May 15. A legislative act for that purpose will be issued during the week.
In the long term, the total effects on the Greek economy will be positive. Given that the degree of dependence on oil imports is high, the low rates are expected to improve the trade deficit and contribute toward the reduction of inflation.
The domestic market expects the stabilization of prices at low levels throughout 2020 and estimates that the industry’s outlook depends on demand in America, the biggest consumer in the world, as well as China, and on the measures for the gradual reinvigoration of economic activity in Europe.
The Environment and Energy Ministry is monitoring the situation in the domestic market through constant contacts with the sector’s associations, and is examining additional measures to intervene with the aim of strengthening liquidity and averting the collapse of enterprises in the sector.