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Protests favour fuel prices reduction?

22 Nov 2018 18:05|Marcin Lipka

“In most EU countries petrol stations are not in a hurry to reduce their fuel prices. However, there are two exceptions - Bulgaria and France. French and Bulgarian drivers have started to protest against high prices and it is possible that it may have an impact on the reductions in fuel prices,” writes Marcin Lipka, Conotoxia Senior Analyst.

For over a month and a half, the unleaded petrol market has been on a downward trend. The price of one litre of fuel in European refineries decreased by 0.55 PLN, reaching the level of 1.54 PLN per litre.

Since the Dutch or Belgian refineries set wholesale prices for entities in other countries, very similar drops (by about 0.50 PLN) can also be seen in Poland. The price per litre (without negotiating rates for larger customers, taxes, excise duty and fuel fee) is 1.94 PLN per litre on the Polish market. Usually, companies selling fuels pay between the European price and the one offered by the country.

According to the European Commission's data, a litre of unleaded petrol in Poland cost 5.04 PLN on November 19th. This is a decrease by 0.03 PLN compared to the value from a week ago and 0.07 PLN less than on October 22nd. So why are retailers not lowering petrol prices for consumers?

A long line of excuses

Part of the reasons why fuel prices were high could be justified. Retailers (also those abroad) were waiting to increase diesel prices in September and October when crude oil was becoming more expensive and wholesale fuel prices were going crazy. Moreover, shutdowns in European refineries accompanied this. The drought in Germany also had a negative impact on fuel transport, causing problems with transporting of diesel with the Rhine, making it more difficult to transport diesel with the Rhine and, in a sense, importing it from other parts of the EU, as well as from outside the EU.

Traders, knowing the habits of drivers well, did not want diesel prices to exceed petrol prices. They found the way to reduce losses caused by low margins on diesel oil, which on average sells 3 times more than the popular "95", with relatively high prices of lead-free fuel.

However, it seems that in most cases the losses have already been made up for and the past two weeks were the period of harvest for the petrol stations. It is becoming more and more difficult to justify the current lack of discounts, although, it should be stressed that prices remain high practically throughout Europe.

The weighted average price of unleaded petrol decreased by only 3.6 euro cents per month in the European Union (1 euro cent is around 0.043 PLN). In Poland, it was by 2.6 cents (the difference of 0.07 PLN mentioned above is a result of the changes in the exchange rate of the euro in relation to the zloty).

Diesel depreciated by 1.2 euro cents within a month at EU stations, and in Poland, it increased by 2 euro cents. Greater growth in diesel prices than in Poland was only visible in Germany (4.6 euro cent) and Finland (3.3 euro cent) last month.

Are the protests working?

According to the European Commission's data on fuel, the biggest decreases in fuel prices are observed in France and Bulgaria. The Eurostat provides information stating that the price of unleaded petrol fell by as much as 9.6 cents over the Seine during the month. In the case of diesel, the decrease was at the level of 5.7 euro cent.

In Bulgaria, until mid-November, prices had fallen slightly, but in the last week of November, according to EC data, prices of unleaded petrol fell by as much as 6 euro cent per litre. Monthly decreases in France and weekly ones in Bulgaria were the largest in the entire European Union. However, these countries also have another issue in common. Drivers strongly protested against high prices at petrol stations.

22 Nov 2018 18:05|Marcin Lipka

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