"As of Wednesday, the price of 20 liters of gasoline will rise by LL230 for each 20 liters in pumping stations. This rise will continue for the next four weeks until it reaches LL1,000 in total," Abou Hamzeh told The Daily Star by telephone.

At present, motorists are paying LL22,500 for 20 liters of gasoline and experts say that the price is far below the international rates.

Oil prices rose Monday, adding to gains in the previous session amid concerns over production in the North Sea. OPEC said it expected refinery problems to affect the market next year. August Brent rose $0.09 to $77.66 a barrel, retreating from an 11-month high of $78 earlier in the day on the ICE Futures exchange in London.

Abou Hamzeh believes that the new increase is very reasonable, given the fact that the barrel of oil is more than $75 in the international markets.

But he admitted that due to low income in Lebanon, many Lebanese may not be too pleased with the new increase.

"The prices of gasoline in Lebanon are far lower than the international markets and the government has no choice but to amend the price because the treasury is already losing money," Abu Hamzeh said. He added since the price of a barrel of oil exceeded $50 the Finance Ministry's tax revenues from the sale of oil and gasoline almost vanished.

The government used to collect LL14, 000 from the sale of 20 liters of gasoline few years ago.
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"The government now levies a 10 percent VAT tax on the import of oil to Lebanon. But the state is hardly making any money from the overall sale of gasoline," Abou Hamzeh said.

He added that Lebanon imports 1.3 million tons of oil and gasoline each year and this amount usually meets the market's needs.

Nearly 15 companies import oil directly from the international markets and then sell them directly to gas stations and retailers. Some economists urged the government to buy oil directly from oil producing countries to cut out the middle man and save on commissions.

"With the current prices, the government hardly collects LL100 from each 20 liters of gasoline," Abu Hamzeh said.

He stressed that the new rates should not be a cause of alarm in Lebanon. "The average Lebanese does not consume more than 20 liters of gasoline each month and I don't think that a mere LL1,000 will add to the financial woes of the citizens," Abu Hamzeh said.

The president of the gas station owners Sami Brax defended the planned increase in the price of gasoline. "The government is losing money from the international oil rates and I expect the Lebanese to appreciate the situation and not make a big issue out of this matter," Brax said.

Abu Hamzeh suggested transforming some of pumping stations into gas instead of oil because it is 50 percent cheaper than oil and above all more environmentally friendly.

He added that motorists would have to invest about $500 to transform their cars from gas to oil. -Daily Star