The price of fuel should really be exploding right now: it is holiday season. And in addition to the war in Ukraine, the conflict in the Middle East is also escalating. But the opposite is the case. Even experts are surprised.
Anyone standing at the gas pump these days is probably surprised: at around 1.60 euros per litre, the price of diesel is as low as it was 13 months ago. And at 1.70 euros, petrol is cheaper than it has been for six months.
This is a blessing for holidaymakers, especially during the holiday season – and a rarity. The low prices are also surprising because the war in Ukraine is accompanied by an escalating conflict in the Middle East. In the past, these were reasons to explain price increases.
So how can this be?
Why is the price of fuel so low?
Hagen Reiners is an oil price expert at the information service Argus Media. He says: “The answer to this seemingly simple question is actually quite complex. In general, one can say that the prices for the primary product crude oil have fallen somewhat.” Another point is that the profit margins for refineries, especially for diesel, have fallen significantly in recent months.
“Demand for crude oil is currently estimated to be declining somewhat, for example due to weak economic data from the USA,” says Reiners. This means that the end products diesel and petrol are also cheap at the petrol station. The Organization of Petroleum Exporting Countries is also an important factor. “OPEC is actually planning to increase production. This was reduced in October last year in order to stabilize the high price a little.”
ADAC: “It remains to be seen whether prices will remain so low”
Andreas Hölzel, an expert on the subject at ADAC, says: “The low fuel prices are due to favorable conditions, especially the price of oil. North Sea oil, which is relevant for us, had a very low price of around 76 to 77 US dollars per barrel last week.” However, the price is currently rising again. The previous price drop was mainly due to a weak global economy, especially in the USA, China and Europe.
“The current moderate price increase could be linked to the growing tensions in the Middle East. Fears of further escalations there could increase the price of oil. As a rule, fuel prices are low when the price of oil is low,” Hölzel confirms Reiners’ view. “Last week marked the lowest level for petrol in the past six months and the lowest level for diesel in 13 months. That was good for drivers, especially now during the travel season. It remains to be seen whether prices will stay this low.”
Source: Stern
