OPINION

Threat of profiteering

The Greek experience of the occasional skyrocketing of global oil prices has not been the best. The first oil crisis in 1973 plunged the Greek economy into a cycle of stagflation while the next one, in 1978, undermined its productive structure. It is not certain whether the soaring oil prices will turn into a crisis or whether this is a result of seasonal factors which are set to pass. International commentators are split on the issue. Some European analysts believe that oil prices will move above $40 a barrel and head up toward a peak of $50. More circumspect ones maintain that surging oil prices are a result of seasonal demand in the US, coupled with hitches in the Gulf oil supply and red-hot demand in China. World oil prices have been simmering close to 13-year highs and it is indicative of the situation that European Central Bank President Jean-Claude Trichet said that the bank will not trim interest rates so as to tame inflationary pressures that result from the oil price rise. Regardless of the causes behind the high oil prices, the Greek government must be prepared to counter cases of profiteering. Fuel prices on the island of Crete are hovering around one euro per liter. Furthermore, the Greek economy is largely dependent on oil. From power production to transport and the rural sector, oil accounts for a significant part of the cost and a continuation of high prices will fuel inflation and undermine the competitiveness of the Greek economy. The government must take prompt action to dampen cases of profiteering. The authorities must stay alert and take measures to temper the adverse effect on crucial productive sectors. It has the means to do so – even by using short-term tax policies to contain the price increase. Above all, it must be prepared for any eventuality.