Post on 19-Jan-2017
Recent Developments in Oil Prices and Reflection to Pump Prices in Turkey
DR. EROL METIN
SEM ENERGY, LOGISTICS AND SUSTAINABILITY
IAEE CONFERENCE 24 -27 MAY 2015 ANTALYA
Price Movements; Brendt Crude Futures
Peak 145 $/bbl
Economic Recovery
Global Financial Crises
Demand growth
Lowest price 46$/bbl
2015 : recovery from lowprices
Source : www.iea.gov; www.nasdaq.com
Supply demand balance and US crude production vs imports
Source : www.iea.org www.eia.gov www.vox.com
Correlation between product prices and inflation and growth
Source : Worldbank, Turkish Ministry of Finance
Currency effect on reflection of oil prices to Turkish market
TL/bbl$/bbl
Stronger US$ vs TL, in late 2014 and 2015, has partially suppressed the positive effects of decreasing oil prices .
Average increase in Crude in 2015• 25 % in US$• 47 % in TL
Refinery Prices vs Platts Quotation
Ex refinery fuel prices have been referenced to Med Platts Quotation for many years. The price movements have been usually adjusted to remain 1-3% CIF - $/TL frame
Breakdown of Pump Prices
65%57%
51%
28% 32%28%
Reflection of product price movements to pump prices
Breakdown of pump prices
DATE EX
REFINERYSCT VAT
TOTAL OF
DUTIES
DISTRIBU
TION
MARGIN
AVG
PUMP
PRICE
2005 0.552 1.364 0.388 1.752 0.242 2.546
2006 0.695 1.364 0.425 1.789 0.303 2.786
2007 0.705 1.382 0.441 1.823 0.361 2.888
2008 0.853 1.484 0.491 1.975 0.391 3.219
2009 0.724 1.585 0.481 2.066 0.363 3.155
2010 0.877 1.892 0.562 2.453 0.350 3.682
2011 1.277 1.892 0.614 2.506 0.390 4.190
2012 1.438 1.955 0.683 2.638 0.410 4.480
2013 1.459 2.177 0.729 2.906 0.415 4.780
2014 1.574 2.177 0.749 2.925 0.411 4.910
2015 1Q 1.070 2.177 0.654 2.831 0.388 4.289
GASOLINE PUMP PRICE BREAK DOWN (TL/lt)
DATE EX
REFINERYSCT VAT
TOTAL OF
DUTIES
DISTRIBU
TION
MARGIN
TOTAL
2005 21.7% 53.6% 15.3% 68.8% 9.5% 100%
2006 24.9% 49.0% 15.3% 64.2% 10.9% 100%
2007 24.4% 47.9% 15.3% 63.1% 12.5% 100%
2008 26.5% 46.1% 15.3% 61.4% 12.1% 100%
2009 22.9% 50.2% 15.3% 65.5% 11.5% 100%
2010 23.8% 51.4% 15.3% 66.6% 9.5% 100%
2011 28.7% 47.0% 15.3% 62.2% 9.1% 100%
2012 32.1% 43.6% 15.3% 58.9% 9.2% 100%
2013 30.5% 45.5% 15.3% 60.8% 8.7% 100%
2014 32.1% 44.3% 15.3% 59.6% 8.4% 100%
2015 1Q 24.9% 50.7% 15.2% 66.0% 9.0% 100%
GASOLINE PUMP PRICE BREAK DOWN (%)
Breakdown of pump prices
DATE EX
REFINERYSCT VAT
TOTAL OF
DUTIES
DISTRIBU
TION
MARGIN
AVG
PUMP
PRICE
2005 0.602 0.835 0.296 1.131 0.208 1.943
2006 0.747 0.836 0.335 1.171 0.281 2.199
2007 0.743 0.850 0.347 1.197 0.347 2.274
2008 1.069 0.930 0.428 1.357 0.377 2.803
2009 0.726 1.004 0.374 1.379 0.350 2.455
2010 0.911 1.307 0.446 1.753 0.364 2.921
2011 1.381 1.307 0.555 1.862 0.390 3.640
2012 1.523 1.372 0.598 1.970 0.430 3.920
2013 1.554 1.597 0.648 2.245 0.460 4.250
2014 1.649 1.597 0.664 2.261 0.440 4.350
2015 1Q 1.131 1.597 0.566 2.163 0.422 3.715
DIESEL PUMP PRICE BREAK DOWN (TL/lt)
DATE EX
REFINERYSCT VAT
TOTAL OF
DUTIES
DISTRIBU
TION
MARGIN
AVG
PUMP
PRICE
2005 31.0% 43.0% 15.3% 58.2% 10.7% 100%
2006 34.0% 38.0% 15.3% 53.3% 12.8% 100%
2007 32.7% 37.4% 15.3% 52.6% 15.3% 100%
2008 38.1% 33.2% 15.3% 48.4% 13.4% 100%
2009 29.6% 40.9% 15.3% 56.2% 14.2% 100%
2010 30.0% 42.3% 15.3% 57.5% 12.5% 100%
2011 37.9% 35.9% 15.3% 51.2% 10.7% 100%
2012 38.9% 35.0% 15.3% 50.3% 11.0% 100%
2013 36.6% 37.6% 15.3% 52.8% 10.8% 100%
2014 37.9% 36.7% 15.3% 52.0% 10.1% 100%
2015 1Q 30.4% 43.0% 15.2% 58.2% 11.4% 100%
DIESEL PUMP PRICE BREAK DOWN (%)
Effect of market interventions on distribution margins
Diesel Gasoline
June 2009 41kr/lt to 30 kr/lt 44 kr/lt to 26 kr/lt
March 2014 50 kr/lt to 36 kr/lt 43 kr /lt to 36 kr/lt
February2015
43 kr/lt to 34 kr/lt 46 kr/lt to 37 kr/lt
Comparison of Turkish vs EU pump prices
• Turkish pump price, when tax effect is removed, is found to be parallel with the EU- med Countries withoutconsideration of structural differences in markets and logistics, regulatory loads and pricing dynamics
• Given a prompt consideration of imporatnat market & regulatory differences tax free pump prices are morecompetitive compared to similar EU markets
Ave
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Conclusions1- Oil prices have shown significant fluctuations over the last 10 years, effecting markets, investments and energy prices2- Turkish pump prices reflect Med markets and have been strongly influenced by the currency effect in recent months. However, continuous interventions by the Energy Market Regulatory Authority have significantly masked the reflection to consumers.4- Turkish Oil Pump prices shows great dependency to international, primarily to Med Markets and especially when the taxation effect is removed and market differences are properly considered, is competitive with the Mediterranean Markets.6- The profit margins of distribution segment have remained practically the same over the last six years, due to continuous market interventions of Regulatory Authority.
References:
1. www.platts.com2. www.argus.com3. www.iea.gov; Oil Market Report- Monthly Issues4. www.nasdaq.com; markets /crudeoil-brendt-aspx5. www.eia.gov: April 21, 2015, increasing domestic production of crude oil reduces net petroleum imports. 6. R. Yanar, G. Kerimoglu, Ekonomi Bilimleri Dergisi 2014; Vol.3 (2) P.13097. http://www.worldbank.org/content/dam/Worldbank/document/eca/turkey/tr-focus-note-dec-2014-tr.pdf; Focus Note
on Dec 20148. http://www.sabah.com.tr/ekonomi/2014/12/10/cari-acik-yuzde-4un-altina-inebilir#9. www.epdk.gov.tr; Petroleum Market Sector Report, 2013 ; Petroleum Market Monthly Sector Reports and Petroleum
Market Annual Sector Report 2013 10. www.petder.org.tr, Monthly petroleum bulletin, Annual Industry report 201411. https://ec.europa.eu/energy; Oil Bulletin, weekly publication of European Commission
Further correspondence : erol.metin@semenerji.com