Green light for cap on fuel

The government decided yesterday to impose a price ceiling on fuel prices at gasoline stations on a number of islands due to price distortions created by a lack of competition in the sector. The Development and Finance ministries agreed to adopt a recommendation submitted by energy regulator RAE calling for the price measure to be implemented until the end of August. «It is clear to us that the free market does not mean a ruthless market,» said Development Minister Christos Folias. «This message must be received by all players in the fuel market who should contribute responsibly to its proper operation.» The measure will apply to gas stations in 11 island areas including Corfu, Cephalonia, Lesvos, Lefkada and Chios, according to the ministry. Authorities will determine the maximum price by calculating the average sale price of petrol in the greater Athens area and adding transportation expenses. Due to a lack of competition on some of the islands, prices at gas pumps are often extraordinarily high. Unleaded fuel in Athens is being sold for around 1.10 euros per liter, as compared with 1.35 euros per liter in some rural parts of the country. Consumer group KEPKA welcomed the move, saying it will contribute to healthier competition. «Similiar initiatives should be taken by other ministries in other sectors of the economy where the same unhealthy practices are evident,» the group said. Economists have criticized the government’s failure to open several key industries to competition, arguing that protected industries create inefficient markets and upward price pressure. Opposition parties said the price ceiling measure would be ineffective, as it should have been introduced at the start of summer. «As a result of the government’s refusal to clash with profiteers, Greece ranks third among the OECD countries in terms of hikes in the ‘energy basket,’» opposition party PASOK remarked. «This means that Greek consumers and businesses this year paid the highest increases in electricity and fuels.»