Azerbaijan joins global challenge by reforming fuel prices

Although some experts note that the improvement of fuel types plays a minor role in reducing the risk of global warming and issues with our vulnerable environment, the countries of the world support this as a global initiative. Studies show that a large part of environmental pollution is caused by toxic gases released from cars as a result of using fuels that do not meet modern standards.

For example, many leading European countries have stopped selling and producing diesel fuel for more than ten years. Moreover, the world’s car manufacturers, including the Chinese ones, have started exporting cars that meet the new Euro-5 standards.

In addition, the main goal of those countries regarding air pollution is to accelerate the transition to electric cars. Meanwhile, Azerbaijan, which will host the COP29 event in November of this year, is already taking its first steps. Charging stations for electric cars have already been established in Azerbaijan in the last few years, and this indicates that decisive measures have been taken for the import of new generation - 0-emission cars.

However, today in Azerbaijan, especially cars running on AI-92 octane gasoline are still the majority. Experts say that these types of fuels are of low quality and emit more toxic gases into the air as a result of combustion in car engines. Even in most countries, AI-92 gasoline is no longer produced or sold. Moreover, taking into account the greater environmental damage of diesel, measures are being taken to reduce its consumption. For this purpose, in many countries, the price of diesel is regulated so that it is more expensive than the price of gasoline.

Yesterday, the new decision of the tariff council in Azerbaijan on fuel prices showed that it is a fundamental step taken to support the solution to the climate problem in the world. Although Azerbaijan is naturally an oil and gas country, it is extremely sensitive to environmental pollution, global warming, and similar problems. For this reason, starting the production of AI-95 (Premium) octane gasoline that meets the Euro-5 standards in the country and the relative reduction of prices in connection with this are commendable steps.

On the other hand, the slight increase in the prices of AI-92 (rising from 1 manat to 1.10 manats) and diesel (from 0.80 manat to 1 manat) fuel indicates what will happen in the next decade. For example, experts note that the production and registration of new cars with gasoline or diesel engines (with the exception of cars running on carbon-neutral synthetic fuel (e-fuel)) in the European Union will not be possible from 2035. Considering that AI-92 brand gasoline is not used in most countries, it means that countries that already produce cars will have to make a transition to Euro-5 standard engines at once.

Large manufacturers at the global level have already switched to the production of "premium" branded cars with electric and hybrid engines. The reason is very clear; in order to reduce the negative impact of transport emissions on the environment, there is a need to increase the quality of fuel. From this point of view, "Euro-5" is considered more efficient and climate-friendly with its capability to meet the standards. In Azerbaijan, taking into account environmental requirements, the production of fuel in accordance with the "Euro-5" ecological standard has already been started. The use of Euro-5" standard fuel reduces car exhaust gas smoke and emissions to the environment, reduces the possibility of corrosion in the engine, and reduces fuel consumption. As mentioned earlier regarding the decision of the tariff council, the price difference between gasoline and diesel was reduced in order to switch to more gasoline consumption, taking into account the greater environmental damage of using diesel fuel.

It is also important to take into account the fact that statistics show that although the import of gasoline-powered cars to Azerbaijan has decreased, the number of diesel-powered cars has increased significantly recently. The main reason for this was that the price of fuel was lower than gasoline. But it's no secret that along with the repair costs of diesel engines, their damage to the environment is higher. In all countries, especially European countries, as well as in Azerbaijan, taking into account that diesel engine cars pollute the air more, reducing their use is being encouraged.

Of course, the price change will accelerate the transition to fuel-efficient hybrid, electric and CNG (compressed natural gas) powered vehicles.

How will the new fuel price affect the prices of other products?

At present, various questions arising in society regarding the latest decision of the tariff council have started to make everyone think. The first question that comes to mind is "If fuel prices rise, will other products become subsequently expensive?"

Of course, the decisions made by the tariff council regarding transport, transportation, and fuel do not always affect the price of a product. If the prices are increased on the one hand, on the other hand, it is regulated in a certain way. In addition, it is better to understand fuel prices not economically, but rather as a step towards a new and clean environmental cycle.

As for the impact of the latest decision of the Tariff Council on the prices of other products in the country, taking into account the possibility that fuel price increases due to psychological pressure will initially push prices up, strict control measures will be implemented to prevent abuse of tariff regulation and unjustified price increases.