Fuel, at all-time highs: How far will prices rise?

Oil prices fell but fuel rose at an unstoppable pace, while industries demanded emergency measures from the government to ease the crisis.

The conflict took place in Ukraine, but the consequences were global. For this reason, price increases have been unstoppable in recent weeks, mainly fuel prices. A war that has sparked an energy crisis pits the United States and Russia, the two largest oil producers, over a secure future for Europe and the world. Meanwhile, gas station metrics mark unprecedented numbers, and the picture is complex for individuals, operators, service areas, and even governments.

The next few days will be critical. the government president is busy seeking support to reform the EU’s energy system, parts of the transport sector are out of work indefinitely, and dealers are demanding strong measures for the Arrived before the 29th.

In the air, one question: How far will fuel prices go? The rapid rise in recent days suggests that the pace will continue. At some petrol stations, petrol and diesel have crossed the €2 threshold, but there are voices in the industry expecting to raise it to €2.5 a litre.

“I am no longer completely ruling out any possibility,” said Nacho Rabadán, director general of the Spanish Federation of Gas Station Employers (CEEES). In an interview with The Huffington Post, gas station representatives were afraid to give the maximum number, but acknowledged the situation was “very difficult” and “scared for them.”

“We don’t know what the max will be, but it scares us”

  • Nacho Rabadán, Director of CEEES
    At the same time, the cost of refueling at the gas station is higher, which will continue to affect sales prices. They put the average price of gasoline in Spain at 1,844 euros per liter and a 1,817 euros. diesel engine.

At these prices, the average 55-liter tank currently costs more than 101 euros to fill up with petrol, and 100 euros for diesel. That means paying around €36 more than at the start of 2021 if you run on petrol, or €41 more if you opt for diesel.

Even so, prices in Spain are still lower than the European average. The most expensive petrol is in the Netherlands (€2,336) and Germany (€2,259) for another week, while the most expensive diesel is bought in the Nordic countries, notably in Sweden (€2,349) and Finland (€2,032.€).

Why does oil fall while gasoline rises?
In order to calculate gasoline prices, several factors need to be considered, such as: international oil prices, demand, supply, inflation, exchange rates, the political stability of the producing countries, and even speculation itself.

For this reason, Labadan explained that the situation will not be reversed until gasoline and diesel prices stabilize. He clarified that although oil prices have fallen in recent days due to progress in talks between Russia and Ukraine, this will not have an immediate impact on fuel prices. “We don’t buy oil, we buy petrol or diesel, and prices don’t drop by the same percentage,” he added.

According to experts, the international price of a barrel of crude oil and refined oil is inaccurate and maintains a “several day lag”. Therefore, the decline in oil prices is well known, but fuel prices do not follow the same path.

Even so, the evolution of the market is not constantly rising, but is experiencing some volatility. In this sense, Rabadán detailed that traders in the industry say the trend is harmful because “it keeps people buying barrels unaware of where the market is going”, which affects the price of refined oil.

What can be done?
The government is looking into various possibilities to mitigate the impact of the energy crisis, although it did not detail the options. However, they have come up with a “should be or” set of measures from various associations and unions that will serve as “oxygen balloons” for corporate competitiveness and citizens’ pockets.

One of these is an initiative by the Union of Professionals and Self-Employed Workers (UPTA) to expand subsidized specialty diesel to more than 800,000 self-employed people who are not part of the transport sector but need to use it for their activities. Vehicles. The measure means these workers can save 4.90 cents per litre of water they consume.

This is added to the CEEES proposal which includes: reducing the value added tax (VAT) from 21% to 10%; reducing the special tax on hydrocarbons to the established minimum; changing the return of specialty diesel from monthly to monthly, the review of shipping prices based on fuel evolution has been shortened from monthly to weekly. They calculated from the federation that only by reducing VAT would consumers save between 12 and 18 euros on current prices when filling up their deposit.

For his part, CCOO Secretary-General Unai Sordo in recent statements has been in favour of “temporary” tax cuts to ease “short-term and emergency situations”, as well as the introduction of excess VAT. For some first-needed products.

The risk of not getting out of the account
However, it is important to know that the exposure tax may have an impact on the general state budget based on an average fuel price of around €1.40 per litre and oil prices above $60 per barrel. “The final accounts didn’t come out,” Labadan said.

For this reason, the technicians at the Ministry of Finance (Gestha) believe that the “profits” of lowering the fuel tax are “small” and that it is not feasible to reduce the value-added tax due to the “huge costs” of the measure.

“It is not possible to reduce the VAT on diesel or petrol, because we ‘harmonize’ with the EU, which requires us to apply the general VAT rate on fuel, and even requires us to increase the tax on petrol and diesel for ordinary Europeans”, Jose María, Secretary General of Gestha Mollinedo argued to the EFE agency.

For her part, Finance Minister María Jesús Montero would not give further details on the measures to be taken, although she opened up on the option of lowering fuel taxes on Wednesday after being asked by reporters the door..​ “We will take the most effective measures,” he replied.

Faced with this situation, some countries have already acted, such as France, which will reduce the price of a litre by 15 cents from April 1, although this means the cost to the public account of more than 2 billion euros.

On the other hand, Nacho Rabadán recalls that Poland was the first country to take measures outside the community framework, reducing the value-added tax from 23% to 8% with no consequences for the time being. However, Labadan does not rule out that this “blindness” is related to the country’s efforts to take in more than 2 million Ukrainian refugees.

However, if Pedro Sanchez is finally approved by his peers on the issue, the measure is evident among the twenty-seven. Currently, he has met his counterparts in Croatia, Slovakia, Romania, Italy, Portugal, Greece and Germany on European visits to seek support and consensus to solve problems together. If not, then it’s time to wait two weeks to see what the government finally does and what its initial impact will be. At the same time, you have to follow the advice of experts so that it will be cheaper to refuel.

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