Since the beginning of last year, diesel car drivers have had the blues. Each time you go to the pump, the bill goes up. On January 13, consumers had to pay 1.88 euros for a liter of diesel, against 1.48 euros a year earlier. Unprecedented fact, the price of their fuel has even settled permanently above that of gasoline since the outbreak of the war between Russia and Ukraine. An outbreak which adds to the blows of recent years against diesel, with the gradual alignment of the taxation of diesel with that of gasoline, and at the end of the discount at the pump, set up by the government to help motorists cope with rising prices on December 31. Unfortunately for the drivers of diesel cars, another blow of bamboo is about to occur, and this one has nothing to do with the strike movements against the pension reform in the refineries…
On February 5, the European Union will indeed take a new step in its economic response against Russia, with the establishment of another black gold embargo. Since the beginning of December, Brussels has already banned ships from unloading Russian oil in European Union ports. In a few days, imports of Russian refined petroleum products, including diesel, will be undesirable on European territory. The problem is that Moscow is a major supplier of this fuel for the Old Continent. More than half of diesel imports into Europe, around 600,000 barrels a day, come from Russia. “Europeans have abandoned their refining tools for many years because of the low margins of this activity and the environmental problems that arose regularly, and they turned in particular to Russia”, explains Philippe Chalmin, professor of economic history at Paris Dauphine University and founding president of Cyclope, a research firm specializing in the analysis of global commodity and commodity markets.
Obviously, oil operators have not stood idly by in the face of this situation. “The embargo was decided in June, and they had eight months to adapt: specific contracts could be put in place, and alternative sources of supply found”, reassures Olivier Gantois, president of UFIP Énergies et Mobilités, the organization that brings together energy and oil companies. Last March, TotalEnergies had already announced “to end the Russian diesel purchase contracts as soon as possible and at the latest by the end of 2022”, and to diversify its sources of ‘supply.
Operation accomplished according to the company, which confirmed to us that it had terminated all its contracts for the purchase of Russian diesel and now imports production from other continents, and in particular from the Satorp refinery, in Saudi Arabia, of which they are partners. . In addition to the Middle East, the United States, China and India are also possible diesel suppliers. A godsend for these last two exporting countries: they can buy Russian crude oil at a reduced price, process it and export it to the European Union. As a result of this diversification of sources of supply, motorists still traumatized by the queues in the fall, following blockages in refineries, can be reassured: the risk of shortages due to the embargo on diesel are minimal.
Longer supply chains
But the embargo on Russian petroleum products still risks having an effect… on the bill, which could soar a little more! “We are already seeing pressure on the price of diesel, and it could get even worse,” warns Philippe Chalmin. A point of view also expressed by Patrick Pouyanné, the boss of TotalEnergies during an interview on BFM Business: “We will have to find diesel, it can pull diesel prices up.” After having peaked because of the conflict between Russia and Ukraine, diesel had indeed begun to decline at the start of the summer… Before rising again since mid-August. To the point that some experts do not hesitate to speak of the risk of a “mini oil shock” in the weeks following the start of the embargo. In addition to the disruption of the global market, “operators must set up longer and more expensive supply chains than direct supply from Russia”, underlines Patrice Geoffron, professor of economics at Paris-Dauphine University. and director of the Energy Climate team. A cargo ship from Russia takes an average of seven days to reach Europe, compared to several weeks for more distant destinations. As a result, transport costs are higher…
Fortunately, the worst is still far from certain. The oil market and the price of fuels remain quite unpredictable, even for experts who strive to conscientiously build forecasts. “The level of pressure on prices will depend on other factors, in particular on the demand side, underlines Patrice Geoffron. If we look at the forecasts of the International Monetary Fund (IMF), a third of the world economy should be in recession in 2023 and half of the European Union, which would drive prices down.” Another reason not to panic, “the market could have already largely integrated the embargo into the increases of recent weeks, reassures Olivier Appert, advisor to the Energy Center of the French Institute of International Relations (Ifri) And we must not forget that in the final price of diesel, the price of the product represents only a small part, the rest is made up of logistics costs and taxes, some of which do not vary according to the price. Ultimately, the attitude of the Organization of the Petroleum Exporting Countries and their allies (OPEC+), which is due to meet in the coming weeks, will be decisive in the direction that the price of diesel will take.
For households that run on diesel, it is to be hoped that the optimists are right… Because too sharp a surge in diesel prices could constitute yet another stroke of the penknife in a budget already well dented by the inflation that has ravaged the European Union since several months. Especially in France, where the public authorities have long favored this fuel. 60% of the car fleet still runs on diesel today, even if this share has slightly decreased in recent years (-5% since 2015). A social bomb all the more dangerous as diesel is a fuel particularly popular with the poorest households. According to a study by the General Commission for Sustainable Development (CGDD) dated December 2020, “60% of private cars in low-income households are diesels, slightly above the average which is 56% in the survey. This proportion is 64% in rural areas, similar to the national average; it is 54% in urban areas, five points above the average of 49%”. Given the turbulent times and the sensitivity of the French to the price of fuel, it wouldn’t take much to trigger a social inferno…