Fuel station price war drives sharp swings in Estonian fuel prices

Estonian fuel prices are changing daily or even several times a day, driven more by an ongoing price war between fuel station chains than by fluctuations on the global market, ERR reported.

Diesel prices at some stations rose above two euros per litre on Wednesday, but had fallen again by Thursday. Alan Vaht, a member of the management board of fuel seller Terminal, said the price war had been under way for more than a year, since September 1 last year.

“On Monday, prices were raised, and by Wednesday morning they had already fallen by 18.5 cents. Yesterday, prices were raised again, with diesel even exceeding two euros per litre. Today, prices are already 16.5 cents lower in some places,” Vaht said.

Tarmo Kärsna, head of business development at fuel seller Alexela, said weekly price changes of 10 to 15 cents, and sometimes more, had become routine.

“The continuing competition between fuel stations in the Estonian market is the main reason for the daily price changes. Local competition is currently clearly stronger than movements on the global market,” Kärsna said.

The price war began when fuel station chain Neste ended its loyalty programmes and reduced its posted prices compared with competitors. Other chains have since responded by reducing or abandoning their own loyalty programmes.

“Consumers are price-sensitive, and if there is a higher price displayed somewhere, they notice it over time,” Vaht said.

Neste Estonia chief executive Polina Tkatšuk said the country’s fuel market was highly competitive, giving customers a broad choice and prompting fuel sellers to monitor the market closely and respond quickly.

Kärsna said the price war had become “the new reality”. While this could sometimes mean very good prices for consumers, it also created uncertainty about when to buy fuel.