Latvia and Lithuania both hiked excise duties on fuel within the last month, encouraging hauliers to refuel in Estonia.

While Statistics Estonia reported that the volume of retail trade sales rose by 7 percent year-on-year in March, retail sales of motor fuel rose by over twice that, at 15 percent, over the same time frame.

Since fuel accounts for more than a fifth of total retail sales, this significantly boosted overall sales.

"At the beginning of the year, in January, fuel sales at filling stations grew by over 19 percent. This rise continued month by month as excise duties were hiked again in Lithuania and also in Latvia, bringing more customers to refuel in Estonia. If we look at the overall trend in fuel sales, we have seen growth of more than 50 percent in recent years. This certainly cannot be explained by Estonians driving more; rather, transport companies from Estonia, Latvia, Lithuania, and Finland are refueling more in Estonia," commented Luminor's chief economist Lenno Uusküla.

Fuel retailer chain Circle K, which operates filling stations in all three Baltic countries, reported the volume of fuel sales in Estonia alone rose by up to 6 percent in March, even while prices rose by 30 percent. At the same time, the company said this was not so much the result of excise duty hikes put in place by Estonia's immediate neighbors to the south as the result of panic buying amid the Middle East crisis.

Also, buyers in Lithuania are more likely to travel to neighboring Poland.

"There was certainly some degree of panic buying, as it was known that fuel prices would rise — the Strait of Hormuz has been blocked and products are not reaching the market. Many purchases were also made by companies in the agricultural sector, which, fearing price increases, may have bought their fuel slightly in advance. Prices in Estonia and Latvia were relatively similar. In Lithuania, the situation was somewhat different; Lithuania has been highly taxed for over a year, and fuel volumes have mainly been flowing out of there to Poland," said Raimo Vahtrik, motor fuel sales director at Circle K.

Urmas Uudemets, head of the transport company Via 3L, confirmed carriers have found fuel is currently cheapest in Estonia, and many transporters from neighboring countries refuel there while passing through, it being cheaper than in the Nordic countries too.

"The price difference between Latvia and Estonia is seven to ten cents per liter, while between Lithuania and Estonia it is 10 to 15 cents. In the Nordic countries, fuel is clearly more expensive than in the Baltics, so Estonia is currently the place of choice. In transport services, the equation is simple: There are three categories — fuel, labor, and equipment — and if one third rises by 45 percent or even 35 percent, then clearly the cost pressure is very high," said Uudemets.

Latvia upped its excise duties at the end of March; Lithuania in April.

Signs are that the price difference may remain as Estonia has postponed a planned price increase for next month. At the same time, there are no plans in place to cut excise on diesel, which has seen prices rise to historic levels above the €2 per liter-mark in recent weeks. Its current rate is €428 per 1,000 liters, while the EU baseline minimum is €330 per 1,000 liters.

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