The price of gasoline in Armenia is the highest among the CIS countries
The price of gasoline in Armenia continues to be the highest among the CIS countries. According to globalpetrolprices, the price of gasoline (AI 95 (Premium)) in Armenia is 531 dram.
Economist and candidate of sciences Narek Kostanyan points out that importers justify this price based on the purchase cost, as well as transaction costs (expenses arising during the execution of transactions/actions) and their profit margin.
If we look at the prices in neighboring countries and compare them to Armenia, the gasoline price here reaches the levels seen in Europe. In Armenia, the price is 1.31 euros, while in Europe it ranges from 1.6 to 2 euros. However, the minimum wage there and in Armenia differ by almost ten times.
Among the CIS countries, the price of gasoline in Armenia is the highest. Excluding Iran (where the price of gasoline is 11 dram), the neighboring country with the closest gasoline price is Turkey (483 dram). There is a difference of about 80 drams with Georgia (434 dram).
I think we are dealing with an oligopoly market (a competitive market dominated by a few firms that concentrate the production and sale of a particular product). There are 5 to 6 importers, and although the number of importers has increased in recent years, as we can see, this hasn’t had any positive effect on the market. While there were fluctuations in the past, even short-term ones, the price has been quite fixed for a long time now, ranging from 500 to 530/540 drams.
Regarding price regulation and setting gasoline prices, Kostanyan added that the “players” agree on a fixed number.
Of course, they do not openly admit it, but they justify it with high transactional costs. Regulatory bodies should focus on a serious analysis of transactional costs to determine whether these costs are inflated, are just fictitious figures, or if they are actually high, which would also justify the high price. This information, naturally, should be transparent and accessible to the broader public.
To the question of whether the high gasoline price is also related to large-scale imports from Russia and Iran, the economist replied that it is important to consider nearby countries in this case, as importing from distant countries would be more expensive. We can import from oil-exporting countries, primarily Russia and Arab countries.
In the context, Kostanyan also emphasized the importance of the appreciation of the dram.
In the last 2-3 years, the dram has appreciated by 25%. It turns out that if the dram hadn’t appreciated, gasoline would be priced at 700 drams. If the dram depreciates, meaning the dollar rises, the importers will claim that they buy gasoline or other goods in dollars or at another value, and since our dram has depreciated, they will naturally justify the price increase by saying they are buying expensive dollars and importing expensive gasoline. However, in this case, our dram has appreciated by 25%, but this has not been reflected in the gasoline market.
The highest gasoline price in the world is in Hong Kong at 1282 drams, and the lowest is in Iran at 11 drams.