How2B · Let’s Talk Numbers #1 · 25 minutes

🔘 How is the price of gasoline formed in Armenia?
🔘 What factors does it depend on?
🔘 Is it expensive or cheap?
🔘 Is there an internal agreement among business operators?
🔘 How will the price of gasoline change?

On How2B we “talk in numbers” with economist Aghasi Tavadyan.

00:00 The overall picture
02:30 Where is the price of gasoline determined?
05:05 Comparison of gasoline prices in Armenia and neighboring countries
08:38 What being in the EAEU gives Armenia regarding the import of gasoline
10:08 What factors form the price of gasoline in Armenia
14:40 The impact of the dram-dollar exchange rate on the price of gasoline
18:13 Lowering the price of gasoline: an economic issue or a political one
20:32 The price of diesel is more important for our economy
23:30 Will gasoline get cheaper or more expensive?

Gasoline prices in Armenia peaked in early August and then eased for a couple of months. The decline stopped after that, and in the video he argues the cause is mostly outside the country. Pump prices here track world prices. World prices move first, and the local market adds little of its own.

Pump prices in Armenia respond to world prices with a lag. The lag is one to two months when world prices fall. When they rise, the increase reaches the pump almost at once. Retail prices come down slowly and go up fast, so the same movement feels very different depending on the direction.

He compares pump prices with border import prices and finds that the two move closely together. Most of the price gets set when those import costs are formed in world markets. World markets are where that happens, and a few large companies in the local market often change their prices at the same moment. He raises that pattern as a question for further study. He also points to a possible oddity in the data from late 2023, where some months look higher than the import cost would explain. He calls it a hypothesis, not a finding, and says it could be a calculation error.

Next comes the exchange rate. The exchange rate shows up in fuel prices quickly, and that matters because Armenia imports nearly all of its gasoline. The slow decline has a simple mechanical side too. Sellers keep selling fuel they bought at higher prices for a month or two, so pump prices lagged the import costs on the way down.

Against its neighbors, Armenia’s premium gasoline sits near the top of the range. Iran supplies part of the imports, and transport costs explain much of the gap that separates the country from its neighbors. Neighbors aside, he stresses that diesel matters more to the economy than gasoline does, since agriculture and most machinery run on it.

On the outlook, he offers a subjective estimate. The estimate is that prices most likely hold flat over the next month, with a rise a little more likely than a fall. He is clear that this is judgment.

Topic Analysis: Is the Price of Gasoline Gaining Momentum?