Since their record high seven weeks ago, fuel prices have started to decline steadily. Week after week, the prices of a liter of gasoline and diesel have dropped a few cents. According to the monitoring of the Ministry of Ecological Transition, on Friday, August 5, the average price of diesel was 1.83 euros/l, 3.9 cents less than last week. For the Super SP95-E10, the drop in seven days was 1.4 cents, with an average pump price of 1.79 euros per liter. While this Thursday the expected monthly forecasts of the Organization of Petroleum Exporting Countries (OPEC) are published, 20 minutes tells you why and how fuel prices fluctuate and continues the roller coaster ride.
Why are prices falling?
Several factors are behind this slow decline. First, if it is falling, it is because it broke out with the war in Ukraine. The announcement of an embargo on Russian oil sent chills down the spine of a particularly volatile market. Then, if it has not risen, it is partly thanks to the discount of 15 euro cents per liter of gasoline at the pump, exceptionally introduced by the Government. This has been extended until August 31st, so for now, it’s not going up!
Third reason, the fall in the price of Brent, this deposit located in the North Sea whose price per barrel serves to set the amount of crude oil in many people’s stock markets. “The spot Brent price fell $22/b between June 17 ($127/b) and August 5 ($105/b), reaching its lowest level in almost six months,” the report says. 20 minutes the Ministry of Ecological Transition. The reduction in its cost is explained “by the agreements between the OPEC producing countries to increase their production,” says Carine Sebi, economist and coordinator of the Energy for Society chair at the Grenoble management school.
Finally, the expert raises a fourth factor: “the reduction of the margin that is made in the refineries between the price of crude oil and the refined product.” Here again, the Ministry for the Ecological Transition has followed the evolution of the Brent refining margin, which was at 33 euros per tonne the week of January 7, to reach a maximum of 193 euros the week of April 29 and rise now at 62 euros per ton. The ministry explains this gradual reduction in refining margins due to “the volatility of crude oil prices, the increase in refinery production and the drop in gasoline demand.”
How long will this last?
One thing is almost certain, this descent will not last forever (if not, gasoline would end up being free). This could end shortly after the start of the school year. For Carine Sebi, if the Government plans to double the discount at the pumps in September and October, “it is because it foresees an increase in this very sensitive market”. And sensitive to the smallest movements: punctual such as “the expected economic recovery in China that will increase demand and harden the market”, but also seasonal such as “the arrival of winter and the oil needs of countries to heat up”, says the economist.
For its part, the Ministry of Ecological Transition is concerned about “the impact of the economic sanctions taken against Russia, the production difficulties of the OPEC+ member countries, or the forecast of an imbalance in the oil market at the end of 2023 according to the International Energy Agency (IEA)”.
Could we see the same records again as last May?
For Carine Sebi, nothing is impossible. “With her discount, the State intends to take the pill, but for how long? asks the woman for whom the government is unfortunately doing the opposite of what it should be doing. “With this aid we are investing in hydrocarbons instead of allocating the money to non-emitting alternatives that allow us to overcome this dependence on hydrocarbons.”
Conclusion, the day the state can no longer get its hands on the wallet, the backlash at the bombs is likely to hurt.
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