Why are gasoline prices pumping so much?
Since the beginning of 2023, the prices of petrol, diesel and other fuels have risen sharply. Is it the fault of excise duties, speculation or market imbalances? Here are numbers and expert comments
Is the high price of petrol really all the fault of speculation?
Since 1 January, due to the end of the discount on excise duties for fuel (introduced on 22 March and cut in December) and the restoration of the rates in force until 21 March, there has been a significant increase in the prices of petrol and diesel compared to those of December.
PRICES OF PETROL, DIESEL, LPG AND CNG
According to the latest calculations by Quotidiano Energia , the average price of petrol in self-service mode is 1.821 euros per litre, against 1.627 euros on 29 December. The average price of diesel (or diesel), again in self-service mode, is 1.879 euros per litre, against 1.693 at the end of December.
In served mode, on the other hand, the average price of petrol is 1.965 euros (1.779 euros at 29 December) and that of diesel is 2.023 (compared to 1.844).
As of 2 January, the average prices of LPG (liquefied petroleum gas) stood at 0.793-0.804 euros per litre, while those of natural gas between 2.312 and 2.603 euros.
PRICES ON THE HIGHWAY
More recently, on 8 January, ANSA reported even higher values for petrol and diesel on the motorway, respectively of 2.392 and 2.479 euros per liter when served on the A1, on the Rome-Milan section.
THE CAUSES: THE EMBARGO ON RUSSIAN OIL
According to Azzurra Pacces, a journalist for Staffetta Quotidiana , the ultimate causes of the increase in the prices of petrol and other fuels are to be found in the European bans on the purchase of crude oil and refined products from Russia: the first embargo came into force on 5 December last, while the second will start on February 5th.
“The long supply chain of fuel logistics”, Pacces explained to Corriere della Sera , “is preparing for a 'short' of product”. The impossibility of accessing Russian Urals crude is "a problem for the supply of European refineries, in particular for those in Germany and those on the Baltic", he says. And with the imminent stop on supplies of refined products, such as diesel, “the situation will get even worse. Wholesalers anticipate problems and are moving forward.”
– Read also: All the loopholes of Russian oil through Isab di Priolo (Lukoil)
SPECULATION HAS NOT TO DO WITH IT
The increase in fuel prices has been attributed to speculation by various members of Giorgia Meloni's government, such as the Minister of the Environment Gilberto Pichetto Fratin and that of Infrastructure Matteo Salvini.
However, energy market expert Simona Benedettini explained to Corriere that "the growth in fuel prices has nothing to do with speculation, but is essentially due to a condition of excess demand caused by a slowdown in investments in the production of fuels and, more generally, bottlenecks in the supply of oil and in refining which mainly concern diesel”.
“It is a figure common to all EU countries”, adds the analyst: “net of taxes, the average price of petrol and diesel in the euro area has risen. Then the excise duties do the rest”.
WHY DO YOU PAY MORE ON THE HIGHWAYS?
The prices of petrol and diesel are high especially on the motorways because – Benedettini explains – “the distributors bear an additional cost due to the payment of a fee to the motorway manager. Furthermore, distributors have higher personnel costs as stores are usually never completely unstaffed”.
Pacces then points out how "the competitions to award who to entrust the supplies are on the rise: the winner is whoever pays the highest royalties, which he then unloads on the prices".
The ex-manager of ENI Salvatore Carollo does not exclude the speculation factor: “in a chaotic moment”, he told Repubblica , “the already disorderly Italian distribution can favor opportunistic behaviour. The network doesn't have great transparency on prices, it's difficult to understand where to buy. If someone takes advantage of the return of excise duties or expensive refining to round off prices, there will be a tendency to blame the war, the government or the crisis”.
THE DEFENSE OF THE FIGISC
Bruno Bearzi, national president of FIGISC, the federation that represents the interests of fuel plant managers, wanted to defend the category from speculation accusations. A manager of a station or a service area, he told La Stampa , “earns 3.5 cents on the self service and 5 on the serviced one. These are the margins it has on the list price imposed by the company”.
Fuel prices on the motorway, he specified, "are affected by other items such as the cost of 24-hour personnel, for example".
HOW MUCH DO THE EXCISE DUTIES AFFECT
Interviewed by Repubblica , Salvatore Carollo recalled the role of excise duties in the increase in fuel prices. "Italy, as we know, has one of the highest transport fuel taxes in Europe," he said. “It is an easy tax, which governments use to build up cash flows, although it impacts heavily on transport, goods, raw materials, food and agriculture”. However, excise duties, the newspaper points out, have been high for years.
THE REFINING PROBLEM
The decoupling of crude oil prices from those of refined products has a decisive influence on the current price trend, according to Carollo: while in fact the former have fallen – Brent, an international reference, trades at 78.5 dollars per barrel -, petrol and diesel values remain high.
This dissociation, explains the expert, is due to the fact that “the price of crude oil depends only on global supply and demand conditions. And this winter the mild climate, the release of US strategic stocks, the slowdown in the Chinese economy make it go down. But that is not reflected in products, as global refining capacity drops systematically. Today only 82% of the 98 million barrels produced in a day is refined, and a demand of around 18 million is not satisfied”.
The shortage of fuel is felt above all in Africa and Asia, but also in Europe and the United States refining companies "are increasingly struggling to cover market demands" and to meet the high environmental standards required by petroleum products.
In the United States, the world's leading crude oil producers , the refining industry is experiencing a moment of difficulty because companies are generally reluctant to invest in new production capacity: the transition to electric mobility, one of the cornerstones of energy transition plans, it should in fact cause a significant decrease in the demand for fossil fuels for transport, and investments made today may therefore not generate satisfactory returns in the future.
THE SITUATION IN ITALY
The Italian refining sector is also going through a difficult time. “In recent years there has been a stampede of companies”, recalled Carollo, “the last one is Esso, which sold the Trecate plant and will soon disappear with its historic brand. Then there is the icing on the cake of cutting product flows from Russia, which could cease altogether from February. In this scenario, those who refine in Italy, which until a few years ago had almost zero margins, today earn 20 or 30 dollars per barrel”.
– Read also: Here is the Meloni government's plan for Priolo's Isab (Lukoil).
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/rincaro-prezzi-benzina-gasolio-cause/ on Mon, 09 Jan 2023 09:18:27 +0000.