Reasons for Gasoline Price Increase
For this week’s research, we used the following sources:
- Daily data on gasoline and diesel fuel prices, derived from thumbnails of 1in.am YouTube channel videos.
- Monthly fuel price increase database according to the Statistical Committee of Armenia, starting from 2017.
- Monthly fuel import database according to 6-digit foreign economic activity codes and countries.
All databases and chart codes are available on my Github.
First, let’s examine gasoline prices in countries in the region that are primarily considered petroleum product importing states. I should note that gasoline prices in Armenia are the highest compared to our neighbors and EAEU countries. However, the reasons for this are mainly transportation costs and the fact that Armenia is not an oil-producing state. Calculated in AMD at this moment, the price of gasoline in Georgia is approximately 500 drams.
Figure 1. Average Gasoline Price in Armenia and Other Gasoline-Importing Countries in the Region
Figure 2 presents the total quantity of gasoline imported in million kilograms. As can be seen from the chart, the volumes of petroleum product imports remained almost unchanged from 2010 to the beginning of 2019. Starting from 2019, a continuous and stable increase in petroleum product imports has been recorded. In 2017, 200 and 140 million kilograms of diesel fuel and gasoline were imported respectively, while in 2022, it was already 300 and 225 thousand kilograms. Overall petroleum product imports have increased 1.5 times over the last 5 years. Petroleum products are an important source of energy, ensuring transportation and industrial activities. When a country imports more gasoline, it generally means that domestic energy demand is increasing. This can be an indicator of a growing economy, signaling an increase in consumer spending, entrepreneurial activity, and industrial production.
Figure 2. Annual Volumes of Gasoline and Diesel Fuel Imports to Armenia
Figure 3 shows the change in gasoline prices, according to daily publications by 1in.am media. This data was obtained by scraping the thumbnails of videos related to gasoline prices on the 1in.am YouTube channel. As can be seen from the chart, prior to the increase recorded in 2023, the highest gasoline price was in April 2022, when 1 liter of premium gasoline cost 540 drams. By the end of 2022, the price of premium gasoline decreased to 350 drams per liter, a price recorded in February 2023. In 2023, a continuous increase in fuel prices was recorded. We will discuss the reasons for this increase next.
Figure 3. Gasoline and Diesel Fuel Prices in Armenia (AMD)
The next chart shows the price per liter of liquefied petroleum gas (LPG) in the domestic market.
Figure 4. Liquefied Petroleum Gas (LPG) in Armenia (AMD)
Below is the import price of gasoline and diesel fuel. It was calculated by dividing the value and physical quantity data of imports for a given month, from which the import value of gasoline per kilogram in USD was obtained. The resulting indicator was divided by the density of gasoline and diesel and multiplied by the average USD to AMD exchange rate for that month. Of course, the obtained indicator has a certain accuracy issue, as the density of petroleum products can change with temperature, and the selling price of the dollar in the domestic market must also be taken into account. However, the dynamics of this indicator can provide a clear understanding of how much the price of petroleum products at the border, which our economic entities acquire, differs from the price of gasoline in the domestic market.
Figure 5. Import Price of Gasoline and Diesel Fuel
Let’s also consider petroleum product imports by country. 76 percent of diesel fuel is imported from Russia, 10.2 percent from Iran. The interesting thing is that while a liter of gasoline has a very low price in Iran’s domestic market, it is imported to Armenia at almost the same price as from Russia. This could have political reasons, as the price of petroleum products coming from Russia is high due to high transportation costs, while we have a direct border with Iran.
Figure 6. Volumes of Gasoline and Diesel Fuel Imports by Country of Origin
The last chart presents the dynamics of import price and market price for diesel fuel and gasoline. As can be seen, the import price and market price have a high degree of correlation. This means that Armenia’s domestic market is quite competitive and cannot dictate the internal price. The price at which an economic entity buys petroleum products at the border is comparable to the price a regular citizen pays.
Here, the domestic market price was calculated based on the consumer price index database, multiplied by the domestic market petroleum product prices recorded at the end of October 2023. Both indicators presented in the chart, the price at the border and in the domestic market, have a degree of error. This is why in some cases, the price of gasoline in the domestic market is lower than at the border. Regardless, the chart clearly shows that the price of petroleum products at the border shapes the price in the domestic market.
The market is competitive and responds quickly to changes in gasoline prices at the border. To regulate and lower gasoline prices, they must first be regulated at the border. Armenia is part of the EAEU common market, and according to the EAEU agreement, a common energy resources market should operate. The relatively high price of gasoline is mainly due to transportation costs. It is possible to diversify gasoline imports and import it from Iran, where transportation costs would be lower, but this is already a matter of political economy and the formation of internal infrastructure.
Figure 7. Difference Between Petroleum Product Import and Market Prices
Media Reports
On Factor.tv, I spoke about the impact of Russia on Armenia’s economy. The interview is in Russian.
I gave an interview to Panorama media about gasoline prices, discussing how they are formed in our market.
If you are interested in hearing my comments and seeing how I conduct my research, you can participate in my stream.
I am committed to presenting and explaining everything I do in a stream or vlog format. This will be an initial and experimental endeavor, which I hope will be continuous.
English Summary
Reasons for Gasoline Price Increase
For this week’s research, we used the following sources:
- Daily data on gasoline and diesel fuel prices, derived from thumbnails of 1in.am YouTube channel videos.
- Monthly fuel price increase database according to the Statistical Committee of Armenia, starting from 2017.
- Monthly fuel import database according to 6-digit foreign economic activity codes and countries.
All databases and chart codes are available on my Github.
First, let’s examine gasoline prices in countries in the region that are primarily considered petroleum product importing states. I should note that gasoline prices in Armenia are the highest compared to our neighbors and EAEU countries. However, the reasons for this are mainly transportation costs and the fact that Armenia is not an oil-producing state. Calculated in AMD at this moment, the price of gasoline in Georgia is approximately 500 drams.
Figure 1. Average Gasoline Price in Armenia and Other Gasoline-Importing Countries in the Region
Figure 2 presents the total quantity of gasoline imported in million kilograms. As can be seen from the chart, the volumes of petroleum product imports remained almost unchanged from 2010 to the beginning of 2019. Starting from 2019, a continuous and stable increase in petroleum product imports has been recorded. In 2017, 200 and 140 million kilograms of diesel fuel and gasoline were imported respectively, while in 2022, it was already 300 and 225 thousand kilograms. Overall petroleum product imports have increased 1.5 times over the last 5 years. Petroleum products are an important source of energy, ensuring transportation and industrial activities. When a country imports more gasoline, it generally means that domestic energy demand is increasing. This can be an indicator of a growing economy, signaling an increase in consumer spending, entrepreneurial activity, and industrial production.
Figure 2. Annual Volumes of Gasoline and Diesel Fuel Imports to Armenia
Figure 3 shows the change in gasoline prices, according to daily publications by 1in.am media. This data was obtained by scraping the thumbnails of videos related to gasoline prices on the 1in.am YouTube channel. As can be seen from the chart, prior to the increase recorded in 2023, the highest gasoline price was in April 2022, when 1 liter of premium gasoline cost 540 drams. By the end of 2022, the price of premium gasoline decreased to 350 drams per liter, a price recorded in February 2023. In 2023, a continuous increase in fuel prices was recorded. We will discuss the reasons for this increase next.
Figure 3. Gasoline and Diesel Fuel Prices in Armenia (AMD)
The next chart shows the price per liter of liquefied petroleum gas (LPG) in the domestic market.
Figure 4. Liquefied Petroleum Gas (LPG) in Armenia (AMD)
Below is the import price of gasoline and diesel fuel. It was calculated by dividing the value and physical quantity data of imports for a given month, from which the import value of gasoline per kilogram in USD was obtained. The resulting indicator was divided by the density of gasoline and diesel and multiplied by the average USD to AMD exchange rate for that month. Of course, the obtained indicator has a certain accuracy issue, as the density of petroleum products can change with temperature, and the selling price of the dollar in the domestic market must also be taken into account. However, the dynamics of this indicator can provide a clear understanding of how much the price of petroleum products at the border, which our economic entities acquire, differs from the price of gasoline in the domestic market.
Figure 5. Import Price of Gasoline and Diesel Fuel
Let’s also consider petroleum product imports by country. 76 percent of diesel fuel is imported from Russia, 10.2 percent from Iran. The interesting thing is that while a liter of gasoline has a very low price in Iran’s domestic market, it is imported to Armenia at almost the same price as from Russia. This could have political reasons, as the price of petroleum products coming from Russia is high due to high transportation costs, while we have a direct border with Iran.
Figure 6. Volumes of Gasoline and Diesel Fuel Imports by Country of Origin
The last chart presents the dynamics of import price and market price for diesel fuel and gasoline. As can be seen, the import price and market price have a high degree of correlation. This means that Armenia’s domestic market is quite competitive and cannot dictate the internal price. The price at which an economic entity buys petroleum products at the border is comparable to the price a regular citizen pays.
Here, the domestic market price was calculated based on the consumer price index database, multiplied by the domestic market petroleum product prices recorded at the end of October 2023. Both indicators presented in the chart, the price at the border and in the domestic market, have a degree of error. This is why in some cases, the price of gasoline in the domestic market is lower than at the border. Regardless, the chart clearly shows that the price of petroleum products at the border shapes the price in the domestic market.
The market is competitive and responds quickly to changes in gasoline prices at the border. To regulate and lower gasoline prices, they must first be regulated at the border. Armenia is part of the EAEU common market, and according to the EAEU agreement, a common energy resources market should operate. The relatively high price of gasoline is mainly due to transportation costs. It is possible to diversify gasoline imports and import it from Iran, where transportation costs would be lower, but this is already a matter of political economy and the formation of internal infrastructure.
Figure 7. Difference Between Petroleum Product Import and Market Prices
Media Reports
On Factor.tv, I spoke about the impact of Russia on Armenia’s economy. The interview is in Russian.
I gave an interview to Panorama media about gasoline prices, discussing how they are formed in our market.
If you are interested in hearing my comments and seeing how I conduct my research, you can participate in my stream.
I am committed to presenting and explaining everything I do in a stream or vlog format. This will be an initial and experimental endeavor, which I hope will be continuous.