This unprecedented rise in fuel prices is also far below the rise in oil prices.
Since the beginning of the year, 95-octane petrol has risen by 5.3%, while diesel has risen by 7.21%. In both cases, the price increase is lower than for oil. Brent’s barrel – a benchmark in Europe – has risen by 16.7% since 1 January. If you take a slightly longer period, since the beginning of 2021, the price of oil has gone from $ 50.37 to $ 96.37 this week, an increase of 91.3%. In the same period, 95-octane gasoline rose by almost 30% and diesel by 33%.
Sense fre
The relentless rise in the price of a barrel of Brent makes analysts think that fuel prices will not stop and will continue to rise. The cause of the rise in oil is clear: with the postcovid recovery, demand has grown, while supply has not kept pace. It has gone from a minimum consumption in the spring of 2020 – during the confinements – when even in the United States it was paid to those who took crude from the farms and in Europe land was touched with barrel prices even at some point below $ 30, to an increase in demand with the resumption of economic activity that has not stopped.
The consequence is also clear. Energy prices, including oil and fuel, as well as gas and electricity, have triggered inflation. Not only in Spain, but also in Europe as a whole and especially in the United States.
The fact is that fuels have reached all-time highs this week, when oil is below record highs. From 1987 until now, the maximum price of oil was reached in July 2008, when Brent was trading at 143.95 euros a barrel. At that time, the price of a liter of 95 octane petrol was 1.23352 euros and a liter of diesel cost 1.30049 euros. That is, in both cases below current prices.
The current rise in the price of fuel is very similar to that of raw materials. The pandemic led to a drastic drop in oil production, while demand for recovery has far outstripped supply. The adjustment of production at the time of greatest impact of the barrel was 5.8 million barrels per day. The Organization of the Petroleum Exporting Countries (OPEC) and its Russian-led allies (known as OPEC +) decided to gradually resume production.
In fact, in July last year these countries agreed to increase production by 400,000 barrels per day each month. An increase that, as shown by the evolution of prices, has been insufficient in the face of strong demand for recovery. In addition, at their last meeting, by video call on February 2, they decided to “reconfirm the production adjustment plan” and maintain this increase of 400,000 barrels per day for March without raising the rate.
The losers
Rising fuel prices are affecting the entire economy, as it is a key factor in rising inflation. But there are a couple of sectors that are particularly affected: transport and the primary sector. Farmers, farmers and fishermen. For the latter, fuel is one of the main operating costs, between 15% and 30%.
In the case of transport, after the agreement between the Spanish government and industry organizations to call off the strike that had been proposed for Christmas, now companies, and especially the self-employed in the sector, hope to have an impact on their customers rising diesel prices.
The keys
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1. Why have fuels become so expensive?
During the biggest impact of the pandemic, the price of oil plummeted, leaving economic activity virtually paralyzed. OPEC producing countries and their allies cut production by 5.8 million barrels a day. But when the economic downturn came, they decided to increase production very gradually, by 400,000 barrels a day every month.
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2. What is the immediate future?
No improvement in the situation is expected at this time. OPEC + decided this month to keep pace with the increase in production in March. Insufficient pace to moderate prices, as demand, with the recovery postcovid, continues to rise.
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3. What is the consequence?
The rise in fuel prices is directly related to inflation. It is not the only factor that is driving up prices, but to give you an idea, Spanish inflation in January was 6%, while core inflation – excluding energy and food – was 2%. 4%.