Fuel prices are approaching €2 per litre: why a further increase? – Economy
Fuel prices have been on the rise since the beginning of the year, while the government boost ended on December 31. Count €1.94 per liter of diesel (+2.7 cents compared to last week) and €1.91 per liter of unleaded (+3.5 cents), according to the latest figures from the Ministry of Ecology, published Monday.
Prices that are getting closer and closer to the symbolic bar of €2 per litre, while at the same time the price of a barrel of oil has only increased by $4.50 in one month, to 86.20 $ versus $81.70 in early 2023.
Usually, three factors can explain a variation in fuel prices: “Oil itself, linked to the price per barrel, the forex (the price between the dollar and the euro) and the refining margin”, explains Thierry Bros. , specialist in the energy market and teacher at Sciences Po.
Embargo on Russian petroleum products
Two reasons explain this constant increase since January 1st. First, there is the refining margin, which corresponds to what the oil company earns after releasing petroleum products (gasoline or diesel) from crude oil. But the costs to produce them have increased. “Refining margins have taken 25% since the beginning of the year,” says Philippe Charlez, expert in energy issues at the Sapiens Institute, on Twitter. The price went from €100 to €120 per tonne, according to his graph, which is based on data from the Ufip (French Union of Petroleum Industries) collected on the Rotterdam market (Netherlands).
The increase in fuel prices is linked to tensions on the market for refined products: crude has remained almost stable at around $80/bbl while refining margins have increased by 25% since the start of the year. Embargoes cost more to the French than to the Russians! pic.twitter.com/lHu2Ex9LZJ
— Philippe A. Charlez (@Phcharlez) January 24, 2023
The other reason is the entry into force of the embargo on Russian petroleum products on February 5, according to Thierry Bros. This is the third embargo since the beginning of the invasion of Ukraine after that on coal, on August 11, and on crude oil, on December 5. In fact, Russia had already anticipated European sanctions by redirecting its sales to the Asian market. In March 2022, “China’s and India’s combined oil imports from Russia surpassed those of the 27 member states of the European Union”, according to the BBC. Asian countries can then resell diesel and gasoline to us, necessarily at higher prices…
Gasoline prices more expensive in France than in Europe
Beyond these two reasons, the price increase is part of a broader context, according to the energy market specialist. “For a long time, we ‘dieselised’ our vehicle fleet without adapting our refining tool”, explains Thierry Bros. “This is what generates additional tension” on diesel. In addition, the price of gasoline (excluding taxes) has increased three times more in France than in Europe, explains BFMTV. In one year, it’s 19 cents more at the pump in France, 7.5% above the euro zone average.
To cushion (a little) the increases, the State has set up, since January 16, the “fuel check”, which replaces the rebates at the pump (30 cents until October 31, then, 10 cents until as of December 31). Only 3.5 million French people have requested it so far, or just over a third of those eligible.
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