In the Federation of Bosnia and Herzegovina, the Decision on limited margins for oil derivatives adopted in April 2021 is still in force. According to that Decision, the maximum amount of the margin in wholesale is 6 pfennigs, while in retail the margin can amount to a maximum of 25 pfennigs per liter. The number of violations has been significantly reduced, although at first there was a lot of evasion of that restriction, Merima Maslo, assistant to the federal minister of trade, explains in an interview for Fena.
“In the first year after the adoption of the decision, about 500 thousand BAM misdemeanor orders were issued. However, recently there has been less and less, which means that satisfactory discipline and adherence to the decision that is in force has been achieved,” says Maslo.
She pointed out that the prices in the Federation of Bosnia and Herzegovina are always the lowest or among the lowest.
“So let’s say in July of this year, as far as BMB-95 is concerned, the Federation of Bosnia and Herzegovina had the lowest prices,” adds Maslo.
She points out that, if prices in BiH are compared with other countries in the region, North Macedonia, Slovenia, then Serbia, Montenegro, Croatia, and Albania follow with higher prices.
However, the fact is that prices are rising, so the average retail price of a liter of BMB 95 at the end of August is 2.77 BAM, higher by 7.36% compared to the previous month, but also on August 31, the price of the said derivative is lower by 7.05% in compared to the average price from August 2022. As for diesel, the average price is 2.80 BAM per liter and that average price is 12% higher compared to the previous month. However, on August 31, the price of diesel is lower by 13.04 percent compared to the average price from August 2022.
Method of determining oil prices
The public is often agitated by data that crude oil prices are falling while fuel prices at gas stations are rising. The Ministry of Trade explains that the two concepts of crude oil and oil derivatives as a finished product should be separated because prices are formed in different ways.
Namely, there are appropriate stock exchanges for crude oil, the most famous is the London one, where the price is influenced by the supply and demand ratio, the dollar exchange rate, as well as the complete geopolitical situation. When the crude oil is sold at those stock exchange prices, it goes to tankers, and this is a process that takes several weeks.
Then the OPEC countries, which export almost 40 percent of the world’s oil, hold meetings in Vienna at least twice a year when they make decisions related to the production and export of crude oil. At the last meeting in April this year, they decided to reduce production by nearly 1.4 million barrels per day, which represents about 3.5 percent of total exports.
“It is worrying that OPEC still insists on its decision to reduce production to 1.4 million barrels per day, which essentially causes more demand than supply and, as a result, the price naturally goes up. And now everything depends on the dollar exchange rate and it is very difficult to make any forecasts in that sense,” the assistant of the federal minister of trade explains the situation.
She adds that the refinery price is something completely different.
That price is determined by the refinery, based on a special PLATTS EUROPEAN MARKETSCAN quotation to which a refinery premium or refinery margin is added. In addition, the formation of prices is influenced by domestic regulations related to indirect taxes. For example, the excise taxes which for BMB 95 amount to 35 pfennigs per liter of fuel, for diesel 30 pfennigs, for heating oil 45 pfennigs, with the fact that another indirect tax is immediately calculated, which is the toll which is 45 pfennigs, except for kerosene and heating oil.
“It represents the purchase price to which the distributors add their margins, wholesale and retail. After that, we arrive at the selling price to which 1 pfennig is added per liter of each derivative, which is a fee for mandatory reserves and financing of the Oil Terminal of the Federation of Bosnia and Herzegovina for the purpose of securing those mandatory reserves,” explains Maslo.
She pointed out that price formation is influenced by supply and demand.
“When forming prices, demand and supply are very important, and as for demand, if it does not decrease, the price will not decrease either. The fact is that the customers are accomplices in the story related to prices, because essentially only the competition will force the retailer to lower the price,” adds Maslo.
She emphasizes that through the application of the Federal Ministry of Trade, which is followed by more than 200 thousand users, customers constantly have information on the prices and margins of all 715 gas stations and can therefore orientate themselves on where to get fuel.
Differences in price can be between 10 and 15 pfennigs for the same derivative, which is quite a wide range.
