Lithuania feverish over high prices at the pump

  • 2005-07-06
  • Staff and wire reports
VILNIUS - High gas prices have caused a minor societal quake in recent days, sparking reports of possible economic repercussions and long lines at border crossings with the Kaliningrad exclave, where Lithuanians go to fill their tanks with cheap fuel.

Prices at Lukoil and Statoil gas stations, the largest chains in Lithuania, surged to a new record high on July 4, with a liter of 95 gasoline reaching 2.96 's 2.97 litas (0.857 - 0.86 euro) in Vilnius. Prices of diesel fuel edged up to hit 2.93 's 2.94 litas per liter.

On June 29 the retail price of A95 petrol brand, the most popular, crossed the 3 lita threshold.

Wholesale diesel prices of Mazeikiu Nafta, the Baltics' only refinery, remained unchanged at 2.61 litas per liter as of July 4.

Traditionally Lithuania has the highest gasoline prices of the three countries, but the recent spike at the pump has alarmed economists and central bankers. Raimondas Kuodis, director of the economic department at the Bank of Lithuania, said surging oil prices would deal a blow to the nation's economy. Speaking to the Lietuvos Rytas daily, he said that a $10 per barrel rise in oil prices could slow economic growth by about 1 percent.

He pointed out that in developing countries such as Lithuania, basic commodities, particularly energy, have the largest share in the population's expense structure. "People have to spend more litas on fuel, which stops them from buying other goods, mostly durables. This slows economic growth because manufacturers of other goods receive smaller revenues and employ fewer people," he said.

However, the central bank economist dismissed worries that prices for all products would rise in Lithuania due to the surge at the pump. He said calls to cut the excise tax on fuel were "populist" and would aggravate Brussels.

In the meantime, Lithuanians have been lining up at the Kaliningrad border to buy cheaper gas. The line at the Ramoniskes border checkpoint stretched several kilometers, according to reports, though even this failed to intimidate drivers eager to fill their tank with cheap fuel. The retail price of A92 in the Kaliningrad region was 1.6 litas per liter as of June 29, while the price of A95 was several cents higher.

The border checkpoint at Ramoniskes has seen over 1,000 vehicles in recent weeks heading in both directions every day. And despite restrictions, some drivers have begun trading in Russian gasoline.

According to existing regulations, Lithuanian citizens may cross the Russian border with a full tank of gas and 10 additional liters in a metal container once a week.