Латвия, Рынки и компании, Транспорт

If the diesel fuel prices continue to increase as rapidly as in the past few months, the enterprise will not be able to develop, A.Ramolins emphasizes. He admits that, when planning this year's budget, it was estimated that diesel fuel price could reach around LVL 0.76 per liter, whereas now it is already LVL 0.84 per liter, the newspaper Dienas Bizness reports today.

Head of brewery Cesu alus Logistics Department Uldis Grinvalds has admitted to the newspaper that the surge in diesel fuel prices affects the direct delivery costs, which have now increased by more than 10 percent already.

The increase in diesel fuel prices has left a significant impact on the business activity of dairy and other agricultural goods producers, as representatives of the field admit. A representative of the joint-stock dairy company Rigas piena kombinats (RPK) pointed out that, in planning this year's budget, the company anticipated a 15 percent rise in diesel fuel prices, but it has already reached 16.8 percent increase, thus this year's budget will have to be revised.

Also dairy producers Valmieras piens admit that logistics' costs have increased significantly, including diesel fuel prices. The increased production and distribution costs have a direct impact on the production prices in retail outlets.

Farmers are concerned about the significant increase of diesel fuel prices as well. As Andrejs Karklins, chairman of the board at the co-op company Trikata KS, informs, refunding of the excise tax that they receive, does ease the situation to some extent, however, this procedure in Latvia, compared with neighbor countries, is quite bureaucratic.

The polled transport and logistics enterprises point out that in their contracts there are usually foreseen the so-called fuel supplementary payments, which allow averting risks related to the rise in fuel prices. However, the business is affected because due to the higher prices, consumer demand for the fuel decreases.

As Dienas Bizness reports, since the beginning of the year diesel fuel price has increased 10 santims per liter. Due to the surging costs for oil products, the prices could still continue to grow.

Latvian Fuel Traders Association Chairman Ojars Karcevskis explains that rising costs for diesel fuel is a result of the growing demand for it and the resultant speculations. "The demand has grown both in Latvia and globally, where in the first quarter of the year, diesel fuel consumption increased by 14 percent. On the contrary, the demand for gasoline decreased by 2 percent and went down by 5 percent for gas," O.Karcevskis said.

However, experts admit that the rising diesel fuel prices affect consumers' behavior. There is less demand for diesel engine cars and people also tend to drive less, thereby consuming less diesel fuel.