Estonia fuel prices swing daily as retailer price war becomes 'new norm'

Fuel prices in Estonia are now fluctuating daily or even several times a day, driven more by an ongoing price war between filling station chains than by the Iran crisis.

While the price of diesel had exceeded the €2 per liter mark at some filling stations in Estonia on Wednesday , prices had dropped again by Thursday, the result of a price war between competitors.

"We've had a fuel price war going on for a year. More than a year, actually. It started on September 1 last year, but since then there has been greater volatility. Even this week — prices were hiked on Monday, but by Wednesday morning they had already fallen by 18.5 cents. Yesterday (Wednesday, September 2 — ed.) prices were raised — diesel even went above €2 per liter — while today prices are already as much as 16.5 cents lower in some places," Terminal management board member Alan Vaht told "Aktuaalne kaamera."

"Primarily, I think, it is the continuing price competition between filling stations on the Estonian market, which has already been going on for a year. Intra-week price fluctuations of 10 to 15 cents, and sometimes even more, have now become a weekly occurrence. That is the main reason when we look at the daily price changes here. Local competition is currently clearly having a stronger impact than movements on the global market," said Alexela head of business development Tarmo Kärsna.

The price war began a year ago when another chain, Neste, abandoned its loyalty programs and lowered the quoted prices at its filling stations below those of its competitors. In a game theory in action scenario, its competitors have followed suit.

"In fact, the other market participants have responded to this and have likewise scaled back their loyalty programs or abandoned them altogether, as Neste did. Consumers are price-sensitive, and if the posted price somewhere is higher, they will notice it in the long run," Vaht added.

Neste Estonia CEO Polina Tkatšuk noted that: "Estonia's fuel market is highly competitive. That is positive news for Estonian customers, because intense competition means there is also a very broad range of offers, and customers have a great deal of choice and high expectations of fuel retailers. As a result, fuel retailers keep a very close eye on what is happening in the market and react quickly."

Consequently, whereas a year ago the thinking was the price war could not be sustained for very long, it has since become the new norm.

"Today, we can say that this is the new reality, which on the one hand is good for consumers — at times prices are very good — but on the other, creates a lot of confusion about when to buy," Kärsna concluded.

Up-to-date fuel prices in Estonia can be viewed by scrolling down the front page of ERR News.

Follow ERR News on Facebook and Twitter and never miss an update!

Editor:
Andrew Whyte, Johanna Alvin