Icelandic unions: Falling oil prices not reflected in retail gasoline costs

The Association of Icelandic Trade Unions (ASÍ) is highlighting a significant disconnect between falling global oil prices and retail gasoline costs in Iceland. Despite a notable decrease in global oil prices, attributed partly to peace talks between the United States and Iran, and a subsequent 21% drop in the import price of gasoline since mid-May, consumers have seen minimal relief at the pump. ASÍ reports that retail gasoline prices have only decreased by approximately 3% during the same period.

This disparity has led to an increase in the profit margins for oil companies. ASÍ points out that the share of profit per liter sold by these companies has grown and is now comparable to levels seen at the beginning of the year, around 60 Icelandic krónur based on the lowest prices. The association has previously raised concerns about the rising share of oil companies' profits in recent years, noting that current levels are historically high.

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The share of oil companies of each liter sold has therefore increased and is now similar to the beginning of the year, or about 60 krónur from the lowest price.

ASÍ also observes that price reductions stemming from global market prices and currency strengthening are being passed on to consumers very slowly. While Costco offers the lowest price per liter, with a reduction of 10 krónur (about 3.5%) from its peak, other retailers have only lowered their prices by 5-6 krónur per liter (around 2.5%). This follows ASÍ's earlier observation that while most retailers passed on a value-added tax reduction, Costco had not.

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Price reductions in global market prices and currency strengthening are passed on slowly to retail prices of gasoline.