Investigations | 26 Nov 2014

The Syrian regime's government decision to increase the price of a liter of diesel from 60 to 80 pounds, and gasoline from 120 to 140 pounds, has caused great resentment among the citizens. This latest price increase is expected to lead to a further deterioration of living standards; since diesel fuel is a core raw material in agriculture, transport, and industry. This will lead to increasing prices the already high prices of services and commodities rise, which as a result of the loss of value of the Syrian pound, against the dollar, have exponentially increased.

The Spread of Chaos

Ahmed, a government employee tells Rozana: "Raising fuel prices is reflected immediately on the transport fares, which are essentially high, and not commensurate with the average income. Internal transport ticket prices in the private sector jumped from 25 to 35 Syrian Pounds immediately. Minibus tariff rose from 20 to 25 pounds; while it rose much higher for taxis."

Said, an educator, sees that the regime's government is primarily responsible for the seeming chaos in transport prices now, wondering: "Why is the government offering to raise the prices of petroleum products on the eve of Eid [Islamic Holiday], knowing that such a decision would lead to chaos?"

Nuha, an employee in the private sector says that after the recent raise in fuel prices her daily transportation fare now costs her 500 Syrian pounds a day. She lives in the Qudsaya area, where minibuses have become rare. She is forced to share a taxi with otjer commuters, and ends up paying 250 pounds. she used to pay 150 or 200 Syrian pounds for the same commute.

Nuha continues: "My monthly salary is circa 25 thousand pounds. Half of that will be gobbled up by transportation costs! Has the government even considred what will happen to us in terms of commuting, not to mention all the rest?"

Start Buying Firewood!

Most of families are dreading the continued disruptions in the supply of diesel fuel, in addition to the high price, especially with the onset of winter.

But according to retired government employee Abu Mahmoud, he and his family will do the same as they did last year—resort to firewood. This is the only solution to the high price of diesel fuel and its scarcity, as well the inability to use electricity for heating because of severe rationing.

Recently, as a direct result of the decision to raise prices of petroleum products and the loss of the diesel fuel in the Syrian market, the price of a liter of diesel exceeded 200 Syrian Pounds.

The Implications of the Decision

Businessmen and industrialists found that the government's move to raise fuel prices will lead to an increase in final product prices, as well as of agricultural products and freight, and public and private transport prices—all of which will negatively impact on the lives of citizens.

While others expected the decision; as on the eve of its issuance, the regime Minister of Economy and Foreign Trade Humam Jazairi announced a decision allowing the private sector to import fuel oil and diesel for industrial facilities in licensed indiurtial cities and areas.

An economist spoke to Rozana, on condition of anonymity, saying that the goal of raising fuel prices, is to provide money and reduce the deficit as well as minimize subsidies.

The expert also adds that the increase in petrol and diesel prices, will be followed by a rise in domestic Liquified Pressurized Gas [LPG] cylinder prices, of which there currently there no supplies on the market. He predicts a price per cylinder as high as 1,500 Syrian pounds.

He points out that the increase of fuel prices used to always come after salary increases. This time expectations were misplaced, as the fuel price increased without a prior increase in salaries, which is expected in August.

How Much Will the State Treasury Gain?

According to the statistics of the regime's Ministry of Oil and Mineral Resources, Syria's annual oil consumption is estimated at 7.5 billion liters. Therefore a 20 pounds increase in the price of a liter, means that the state treasury will gain circa 150 billion pounds per year, from diesel fuel alone.

Syria's consumption of gasoline is estimated at 2.5 billion liters per year, meaning that the state treasury will gain 50 billion Syrian pounds from the recent price increases annually, or the equivalent of 140 million pounds per day.

In total, the Treasury savings realized from the diesel and gasoline price are estimated at circa 200 billion pounds each year.

The regime government's Minister of Oil and Mineral Resources Suleiman al-Abbas stressed that there will be a committee to monitor the price of oil on a weekly basis. This may hint at a possible reduction in the prices of some products, especially gasoline. The Minister vowed during his speech before the People's Assembly almost a week ago, to secure diesel supplies to all the provinces, as per the required provisions for each.

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