Citizens see how diesel and gasoline are becoming more expensive every week, but it is impossible to do anything. Despite the 20 cent aid that the Spanish government put in to help citizens, gas stations destroyed all historical records.
At the height of the coronavirus pandemic, diesel cost about 80 cents, gasoline fell short of the euro. Currently, petrol station markers mark an average of 1.80 euros for diesel fuel, and for petrol we go up to almost 2 euros.
Does this price increase make sense? Not at first glance. The price of a barrel of oil is not at an all-time high (about 120 euros compared to the ceiling of 150 euros in 2008), but even so, the final price of this refined fuel is the highest we have ever seen. So why?
Economist Juan Ramón Rallo points to three main reasons for understanding the rampant rise in fuel prices. It:
Oil barrel price: Despite the fact that the price of a barrel did not reach the maximum mark, for several months the price for it exceeded 120 euros. During the pandemic, the price for this was around 20 euros for several months. Therefore, the cost is six times more than two years ago, the price has increased.
The release of thousands of barrels of oil by the United States helped contain further price increases. But, as we will see in a moment, the price of a barrel is not everything.
Gas price in Europe: On our continent, the oil we buy contains a lot of sulfur, and in order to convert it into fuel (such as diesel or gasoline), we must remove this component, which is harmful to our engines.
Refineries use a filtration process that requires energy, a lot of energy. And the energy used to do this comes from natural gas, gas that has become more expensive in Europe due to the Russian invasion. Therefore, processing is now much more expensive than six months ago.
Transport price: The oil we use comes from afar, and to transport it to our continent we have to use huge ships that cross the Atlantic, Pacific and other oceans. Rising energy prices are making it much more expensive to transport it.
Almost all of these boats run on diesel, and since diesel is expensive… it’s a fish that endlessly bites its own tail.
Shortly speaking, until the refineries are released from work, the price of gas will not fall and barrels of oil will not start to fall (ideally below $100/bbl), it will be very difficult for the market to bring gasoline and diesel prices down to 2021 levels.
Source: Computer Hoy
