Datablog | Inflation and a Georgian’s choice of fuel

A global pandemic and Russia’s invasion of Ukraine have both contributed to skyrocketing rates of inflation worldwide. Georgia is no exception, as people reevaluated their preferences for fuel throughout the past two years.

In August 2022, Georgia’s inflation rate stood at 10.9%, with the price of petrol rising by 18% and the price of diesel by 45% compared with those of August 2021 — this is due in large part to Russia’s invasion of Ukraine.

In response to rising fuel prices, Georgian drivers have been protesting. In early November 2021, during a period of price increases, Soso Pkhakadze, the chair and president of Wissol Group, one of Georgia’s largest oil companies, stated that fuel prices should be even higher due to globally rising prices. 

While arguably a reasonable point, the comment led to protests among Georgian drivers. The Facebook campaign, No to Fuel Prices, was created on November 3 and more than 162,000 people had joined by April 2022. On 27 March, police detained 20 of the campaign’s protestors for paralysing traffic in central Tbilisi as part of demonstrations over fuel prices. Similar large-scale protests have also taken place in Batumi, Kutaisi, Telavi, and Ozurgeti.

According to Geostat, Georgia’s national statistics office, the price of gasoline in March 2022 increased by 45.7%, while the price of diesel increased by 45.65% compared to the same month of the previous year. 

This is in a context where Georgian drivers already were highly price-oriented when selecting which fuel to purchase. Data from the Transparency International survey on public policy, which CRRC Georgia conducted in 2015, 2016, 2018, and 2019 suggests that low prices and fuel quality were the key factors in people’s decision-making on where to purchase fuel. When respondents were asked what factors affect their choice of fuel, 50% mentioned low prices and 48% indicated that they would prefer higher-quality petrol. A further 15% mentioned proximity to the petrol station. Other factors were mentioned by less than 10% of respondents. 

CRRC Georgia’s Omnibus survey conducted in July 2022 suggests that the importance of fuel prices has increased, with nearly two-thirds (64%) naming low fuel prices as a determining factor — a 14 percentage point increase. Notably, the share of people naming proximity halved between 2019 and 2022. 

The 2019 data shows that price was a particularly important determinant for people who use non-branded fuel companies, Lukoil customers, and SOCAR customers. In contrast, Rompetrol and Wissol customers were less price-conscious and more concerned with fuel quality.

Given the data above, it is perhaps unsurprising that the vast majority of drivers (96%) are concerned about rising fuel costs, and a large majority (82%) report that they are driving less, according to the July 2022 data.

Taken together, the above shows that drivers are increasingly concerned about the cost of fuel. 

The data used in this article is available here. The replication code for the above analysis is available here.

This article was written by Makhare Atchaidze, a Researcher at CRRC Georgia. The views presented in this article do not represent the views of CRRC-Georgia, Transparency International Georgia, or any related entity.