Speaking via Zoom during a televised discussion, BP’s chairman and CEO referred to the 6.2% drop in consumption over the five-month period, noting that he had already warned that when fuel prices exceed certain levels, demand reacts.
«»There is elasticity in demand, and when prices rise above certain thresholds—at least the psychological threshold of 2 euros for diesel and gasoline—changes occur in terms of consumption.”, he said.
According to him, for households, this situation translates into restrictions on travel and, ultimately, a decline in quality of life, while for businesses, the problem is even more serious.
«Decline in economic activity»
He placed particular emphasis on diesel consumption, as it is directly linked to transportation and business activity.
As he argued, the decline in demand is a sign of «a slowdown in economic activity,» while also expressing concern about the competitiveness of Greek businesses compared to countries with lower energy costs.
Mr. Michalakakis attributed part of the problem to the maintenance of high excise taxes, arguing that other European countries have adopted a different policy to address rising energy costs.
Fuel shortages and refining margins
Referring to international developments, he pointed out that the biggest problem at this time lies not so much in the supply of crude oil as in the narrowness of the final products.
According to him, problems and constraints in refinery operations have led to a significant increase in refining margins.
As he noted, profit margins on diesel exceed, in some cases, the $50 per barrel and gasoline as well $20, whereas under more normal circumstances, they were trading at around $5 to $10.
At the same time, he spoke of a significant increase in retail margins in the Greek market, arguing that these increases limit or offset the impact of smaller interventions on final prices.
Proposal to Reduce Fuel Taxes
As an immediate measure, he proposed reducing the excise tax to the minimum level permitted by the European Union, as well as considering a reduction in the VAT rate.
In his assessment, such an intervention could lead to a significant reduction in the load on the pump.
To cover the fiscal costs, he proposed imposing a special solidarity levy on the excess profits of oil refining companies, citing similar measures that have been implemented in other European countries.
«When society is suffering, they need to pitch in,» he said.
The Long-Term Response to Renewable Energy Sources
For Spyros Michalakakis, however, tax measures on fuel are a short-term solution. The strategic response, he argued, lies in the faster and more effective development of renewable energy sources.
«The air and the sun belong to us,» he noted, while emphasizing, however, that the expansion of renewable energy must be accompanied by adequate electricity storage and greater participation by citizens and businesses through self-generation and self-consumption.
Finally, he raised the issue of how the electricity market operates, describing the energy exchange as a «black box» and calling for greater transparency.
The main point of his speech, however, concerns the real economy: a decline in fuel consumption is not merely a statistic in the energy market, but may be an indication that households and businesses are now substantially curtailing their activities due to high costs.
