Fuel sellers in Estonia have been locked in a price war for several months. Speaking on the ETV current affairs show "Esimene stuudio," Alexela board chair Marti Hääl said such price wars are nothing out of the ordinary and have occurred in many other markets as well.

"A price war in itself is not unique. It's happened before in Estonia and elsewhere and it's always launched with a very specific goal: to grow or regain market share," Hääl explained. "There are only two ways it can end: either the war becomes too expensive, fails to deliver results and the goal is abandoned or someone falls. There's consolidation, someone buys someone out or smaller players shut down. There are many possible outcomes, but they all have one thing in common: the competitive landscape will inevitably change, diversity will decrease and a new balance will emerge once a new price point is found."

Hääl added that in such price wars, larger players have a significant advantage because they can endure longer.

"International corporations are always in a somewhat stronger position in situations like this. They're better capitalized, have stronger international purchasing power and thus better input prices. Often they're vertically integrated in their supply chains, meaning they're involved in refining or even crude oil extraction, which allows them to implement a war of attrition more effectively. This came through in Neste's statement on September 1 as well — they said, 'We are an international group and we have money,'" Hääl noted.

He also admitted that in September there were many days when Alexela sold fuel at a loss at least once during the day. However, he did not disclose exactly how much the company had lost during the ongoing price war.

"Losses across the entire market are definitely in the millions. It's easy to make a rough comparison: one cent off the fuel price at the pump over a year equals about €10 million or slightly more. That gives you an idea," Hääl said.

He also compared the current price volatility to the previous stability in Estonia's fuel market, which was often criticized as resembling a cartel.

"That previous stability, which people often complained about, is a bit like the electricity market — Aunt Maali in Valga County pays the same for electricity as someone in downtown Tallinn, even though delivery costs vary greatly between those two places. It was the same with fuel. Estonia used to have a very unique pricing model, where fuel cost the same across an entire service station chain. Customers always knew exactly what they'd pay and didn't get unpleasant surprises like finding cheaper fuel just around the corner. But in other European countries and the Nordics, such price differences by location and brand are completely normal," Hääl explained.

Despite the ongoing three-month price war, Hääl said the loyalty of Alexela's customer base has held fairly strong.

"Different fuel sellers are seeing different trends emerge, which likely reflects the nature of their customer relationships and loyalty. Fortunately, Alexela has a very high share of loyal customers — around 80 percent — so we've seen movement in only about 20 percent of our base. But I'm quite certain that this market-wide shift is real and that it's searching for a new balance point," he said.

Hääl believes the price war will have casualties, even if they aren't visible yet.

"I don't think the damage will fully materialize by 2025, but it will come. For the Estonian fuel market as a whole, the equity losses burned through in just a few months easily run into eight-digit figures," Hääl said. He added that while Alexela is trying to support its existing partners as much as possible, new potential partners are currently on hold.

"In the short term, consumers are the winners — there's no question about that, no matter how you calculate it. But there's another economic principle to remember: if you empty your pantry during hard times, you'll still keep eating once the tough period ends, but you'll also need to restock the pantry. From an economic standpoint, once this period ends, the market will definitely look to recoup its losses. I would argue that while consumers may enjoy this short-term win, it's nothing to be happy about in the long run. A stable, predictable fuel price is definitely something of value," Hääl said.

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