Steel yourselves for steep price hikes, consumers warned

Consumer advocacy groups on Monday called for the reinstatement of the fuel subsidy as prices at the pump continued creeping up, while the state-run power utility said electricity bills would likely increase as of next month.

The Cyprus Consumers Association urged the government to reinstate fuel subsidies, warning that prices have risen sharply since the beginning of March and may continue to climb.

Between March 1 and now, the price of 95-octane petrol increased by 10.7 cents per litre, diesel by 16.7 cents and heating oil by 13.6 cents.

The association said further increases are expected this week and possibly next week.

It noted that current prices are close to or higher than those recorded when the state first introduced a fuel subsidy on March 7, 2022.

Petrol currently stands at €1.422 per litre, slightly below the €1.443 recorded at the time.

Diesel, however, is now €1.58 per litre, compared with €1.501 in 2022, while heating oil has reached €1.086, around six cents higher than in 2022.

The association also pointed out that the Consumer Price Index has risen from 107 units in March 2022 to 117 today, adding further pressure on households.

It stated that temporarily reinstating the subsidy would minimally impact public finances, as the finance minister has consistently claimed the state’s finances are sound.

Meanwhile the Electricity Authority (EAC) said their next shipment of fuel – set to arrive at the beginning of April – would be more expensive due to the energy crunch amid the war raging in the Persian Gulf.

As such, electricity consumers should expect electricity prices to go up a month later, in May.

Speaking to media, EAC chairman Giorgos Petrou said the organisation would nevertheless try to mitigate the impact on consumers’ bills.

“Assuming that current prices remain the same, and since our fuel reserves last about one-and-a-half months, and we need about one shipment a month, we may be talking about a 5 to 10 per cent rise on the fuel price.”

He hastened to add: “We’re talking about the fuel price, not the final electricity bill.”

Once the EAC takes delivery of the new shipment – arriving from Europe – it would “combine” that shipment’s price with the prices at which existing stocks were purchased, in a bid to soften the impact on electricity bills.

“You see what’s happening at the Strait of Hormuz. Some of our fuel used to come from there, from the Gulf. So we cannot risk it and wait for prices to come down. Prices might go up further.

“We’ve given instructions that we need to keep our stocks/tanks full. If they are full, the reserves last for about two months.”

According to Petrou, if the conflict ends soon and the situation at the Strait of Hormuz normalises, bringing fuel prices down close to pre-war levels, and this happens before receipt of the next shipment – slated for early May – then electricity bills would be adjusted downward accordingly.

The war has caused the largest oil supply disruption in history, with the Strait of Hormuz previously handling 20 per cent of global oil.

Brent crude oil was trading at around $101 a barrel on Monday. Oil prices eased off slightly, after a

Pakistani oil tanker and two LPG vessels successfully crossed the Persian Gulf chokepoint over the weekend. India was negotiating to move six more vessels, while the United States has allowed Iranian tankers to transit, helping maintain global supply.

Energy expert Charles Ellinas warned of ripple effects on the Cyprus economy.

“We’re not just talking about oil, we’re talking about almost everything that affects traffic, electricity, food production, in general the impacts are enormous,” Ellinas told the Cyprus News Agency.

He warned that Cyprus will see a “fairly large increase” in prices for diesel, petrol and electricity, which had already started and would continue to increase.

“Everything is affected,” he said, “these cuts are very serious and have caused global chaos in the supply of materials.”

Ellinas appealed to the government to impose a price cap on fuel.

He said the Americans could begin to tap into their strategic reserves throughout the week and that the rest of the world may follow their example.

The expert cautioned that oil prices could climb up to $200 dollars a barrel, as Israel began bombing oil facilities on Sunday, prompting the price of natural gas in Europe to rise to €52 per megawatt-hour on Monday.