THE CONSEQUENCES OF THE RISE IN THE PRICE OF FUEL Pârvan: The producers have two options - raising their prices or going bankrupt

• The government should raise the excises to match the European level, according to Cristian Pârvan

The hike in the price of fuel which happened last week, just five weeks after the price increases of January, will affect our wallets, just like the other price hikes of utilities.

Transporters, businesspeople, food producers, even the private gas station owners told us that they have been affected by the gas and Diesel oil price hikes which were announced a few days ago. They said that the narrow profit margins, which are already shrinking, do not allow them to bear the price increases, meaning that they would have to raise the prices of their products and services.

The increase in the price of fuel will lead to an increase in inflation, Cristian Pârvan, secretary general of the Association of Romanian Businesspeople (AOAR), told us. "It is obvious that the increase in the price of gas and Diesel oil, as well as that of utilities, where there is a monopoly and where people have no control, will lead to a hike of inflation. Producers can't afford these hikes, considering that they have profit margins of 3-4%".

In the opinion of Cristian Pârvan, the producers in the industry have two options: raising prices or going bankrupt.

He said that "profits obtained from price increases resulting from the exploitation of monopolistic positions should be taxed". Another solution would be for the government to set up two more chains of gas stations: "With fuel prices rising as they do, the government should raise the excises to match the highest level which they are at in Europe".

• Ion Tache: "We feel the customers' pain"

Private gas station owners are also complaining about the periodic fuel price hikes.

"Please do not mistake us for the big companies. We are in the buyers' shoes. We buying oil products and we resell them. We are forced to sell our fuel at prices that would be very close to the market. As a result, our earnings were so small, that if we didn't have another business to support us, the gas stations would be mere family businesses. Our profits almost fail to cover our expenses. Right now, when the owner of a gas station with six pumps makes 20,000-30,000 Euros a year, it is an exceptional event, where, if the market were to operate normally, the profit should exceed 100,000 Euros", said Ion Tache, the president of the Romanian Association of Private Gas Station Owners.

According to him, "the fuel market has not been functioning normally for the past few years". This year, the sales of private gas station owners fell about 40% compared to the similar period of 2011, and the number of Gas Station Owners registered with the association fell from 468 in 1995, to 290 currently. Ion Tache told us: "Private gas station owners are hanging by a thread, and if we raise our prices, customers will lump us in with the fuel producers, who set the market price".

• Minea: The hikes of the price of fuel will be felt in the consumers' baskets, and consumption will fall

It is absolutely normal that any price increase be included in the price of products consumers buy, said Sorin Minea, the president of "Romalimenta": "I don't know when and how much the price of food will increase, because I do not know how much the prices of commodities will increase. We will see at the end of the month how big expenses will be, and next week they will be included in the end user prices".

Mr. Minea considers that these price hikes will lead to a drop in consumption, saying that the hike of the price of gas and diesel oil can not be borne by food makers: "Talking about profit is talking about illusions. We had no profit last year, this year we are fighting for survival, we have nothing to help us bear the hike in the price of fuel".

• Hagiu: Transporters need to raise their tariffs immediately after the hikes of the price of fuels

Transporters need to raise their prices right away, says Florin Augustin Hagiu, the president of the Federation of Romanian Transport Operators (FORT), saying that if they don't, it means they don't know how to do their job: "As long any cost increases of any kind are not found in the final price of services provided by transporters, and they do not have any clear clauses in their contracts with their customers concerning the cost increases, transporters will not make a profit. If they do not implement these two rules, that means that they don't know how to do their job". He claims that transporters which have a profit margin of 4-5% are the "lucky ones".

At the end of last week, all of the major oil companies in Romania have hiked the price of gas and diesel oil, as a result of the evolution of international quotations on the oil market.

The first company to announce on Thursday the new increases in the price of fuel was "Petrom", followed on Friday by "Rompetrol", MOL and "Lukoil".

Oil companies had last raised the price of fuel on January 12th - 13th 2012.

The main parts of the price of fuel are the VAT, excises, logistic costs, the costs of operating the distribution network, the cost of raw materials, the financial costs and the trade markup.