On Friday, Petrol’s share price fell 0.8% due to unstable and unpredictable Government regulation. While the selling prices of certain petroleum products in Slovenia and Croatia were set even below their cost for some time in 2022, the regulation is less strict in Slovenia this year. In June 2023, Croatia also eased the regulation. But again, in December 2023 Slovenia deteriorated the terms again and decreased margins by EUR 0.03 per liter. The regulation will enter into force on December 5 and will be valid for three months.
The Slovenian government further cut fuel margins, affecting Petrol’s share price. In the comparable period last year, the government interfered in the market with its regulation, lowering retail prices of certain oil derivatives, with the goal of reducing inflation. However, the Slovenian Government again decreased margins by EUR 0.03 per liter for both diesel & NMB-95. The regulation lowers the maximum allowed margin for diesel, namely to 0.0683 euros per liter and to 0.0694 euros per liter for NMB-95. To remind you of the current context, just last week, Slovenian inflation reported the lowest numbers in almost two years at 4.9% YoY. Also, we emphasize that November is 1st month of CPI reporting a MoM decrease. Consequently, the market recognized government regulation in this context as unpredictable/unstable, which resulted in a further slight Petrol’s share price decrease.
Petrol’s share price development
Source: InterCapital Research, Bloomberg
Regulation of petroleum products
In Slovenia, the price of extra-light heating oil has been regulated since 20 October 2021, with the exception of the period between 22 May and 12 September 2022. The prices of petrol NMB-95 and diesel have been regulated since 15 March 2022, with the exception of a brief period between 1 and 10 May. The retail price limitation was in force until 20 June, after which a Decree was adopted on 21 June and determined the maximum margins for sellers; this Decree is still in force.
The Government of the Republic of Slovenia adopted a new Decree on 15 June 2022, excluding prices of motor fuels at motorway and expressway service stations and premium fuels NMB 100 and iQ diesel from regulation. The retail and wholesale prices at such service stations and of premium fuels were market-determined. The retail and wholesale prices at such service stations were market-determined. The Decree changed a few times since then. On 19 June 2023, the Government of the Republic of Slovenia adopted a new Decree on setting prices for certain petroleum products, pursuant to which margins for diesel have stayed limited at EUR 0.0983 per liter and for NMB-95 at EUR 0.0994 per liter. The regulation excludes prices of motor fuels at motorway and expressway service stations and premium fuels NMB-100 and iQ diesel.
In Croatia, prices have been regulated since 7 February 2022. During the first month, the retail prices were capped by a decree and were lower than the cost of the regulated fuels. Since 7 March, the margins have been capped; these enable covering the purchase price, but not also all costs. On 5 June 2023, the Government of the Republic of Croatia adopted the Decree on setting maximum retail prices and determined the maximum margins; it increased the maximum margin for petrol (eurosuper 95) from EUR 0.0995 per liter to EUR 0.1245 per liter, eurodiesel from EUR 0.0995 per liter to EUR 0.1245 per liter, and blue diesel from EUR 0.0531 per liter to EUR 0.0781 per liter. The maximum margin for the propane-butane blend for large gas storage tanks has stayed at EUR 0.3716 per kg and for LPG cylinders (7.5 kg or more) at EUR 0.8229 per kg. The Decree has been in force from 6 June 2023 with bi-weekly validity extensions.