Azerbaijan's Fuel Price Hikes: A Comparative Analysis with Europe

As of July 1, 2024, Azerbaijan's retail price of AI-92 gasoline increased by 10 qepiks to 1.10 manats per liter, and diesel fuel rose by 20 qepiks to 1 manat per liter. The Tariff Council has pledged to reduce the price of Premium gasoline from 2 manats to 1.6 manats per liter starting July 15. Despite environmental justifications, officials emphasize that "even after the tariff changes, retail prices for AI-92 gasoline and diesel fuel remain low compared to most countries." However, the specific countries used for comparison were not disclosed.

Average Salary and Transport Costs

In Azerbaijan, the average national salary has recently been raised to 1,007 manats (approximately $592 or €550) per month. Public transportation costs 30 manats per month for twice-daily usage, constituting one thirty-third of the average salary. A modern car owner can purchase 503  liters of Premium gasoline at the new price of 1.6 manats per liter with their monthly salary.

In contrast, Luxembourg, a small and resource-poor country, offers free public transport. Similarly, Estonia's capital, Tallinn, and Malta provide free public transport. Czech cities such as Frýdek-Místek, Strakonice, and Valašské Meziříčí abolished transit fees in 2018 to reduce air pollution from vehicles.

France and Germany: Public Transport and Fuel Prices

In France, large cities often offer free-of-charge weekends for public transport. Pensioners seldom pay for transport, and students benefit from significant discounts. For other citizens, a single ride in Paris costs €2.10 on most metro and bus lines. With an average salary of around €2,500 per month and Premium gasoline priced at €1.8 per liter, an average French citizen can buy 1,389 liters of high-quality gasoline with their entire salary.

Germany offers the Deutschlandticket, an unlimited monthly public transport pass costing €49. This ticket covers all types of transport nationwide, including regional services. With an average annual income of €5,500, Germans can purchase 112 unlimited tickets or 3,055 liters of Premium gasoline with their monthly salary.

Hungary's Approach

Hungary has also introduced an unlimited monthly pass for €49. In Budapest, the Budapest Card, costing €33, allows unlimited transport use and free access to museums, excursions, and thermal baths. The average salary in Hungary is €1,521 per month, enabling citizens to purchase 894 liters of high-octane gasoline.

Resource-Rich Azerbaijan's Rising Costs

Despite Azerbaijan's rich natural resources, transportation and gasoline costs have increased almost annually in 2021, 2022, and 2024. This trend is perplexing, considering the low cost of gas production at SOCAR (State Oil Company of Azerbaijan) fields, which was 67.57 manats ($39.74) per 1,000 cubic meters in 2022. The cost of producing one ton of oil in 2021 was 115.52 manats, equating to just 11 qepiks per liter of oil.

Conclusion

The substantial difference between production costs and retail prices (1.1-1.4 manats per liter) highlights the unjustified nature of the recent fuel price hikes in Azerbaijan. This discrepancy suggests the application of price voluntarism to address inefficiencies within the monopolistic economy, rather than genuine economic necessities.