BARREL PRICE. The price of a barrel of Brent oil is down slightly at the dawn of the weekend, however, prices at the pump are soaring. How to explain it? What are the causal links? We tell you everything.
[Mis à jour le 11 mars 2022 à 15h59] The price of a barrel of oil was steadily rising until mid-week, before starting to stagnate, then falling to reach $109 the barrel of Brent this Friday, March 11. The prices are still high, of course, but does this drop affect the prices charged at the pump? Not at all. On Friday March 11, prices in French service stations rose again by 7 cents compared to the day before, 52 cents compared to the beginning of the month. On average, a liter of diesel is presented at 2.25 euros in France. So how can this constant rise in prices at the pump be explained, when at the same time the price per barrel is falling? Guest European 1 this Friday morning, the Minister in charge of Public Accounts Olivier Dussopt tried to solve the equation: “The refinement costs are different during this crisis, and so are the tax trajectories.“And To Fix It”one-off tax cuts do not exist“.
The drop in the price of a barrel of oil can be explained quite easily. As Europe is still extremely dependent on Russian gas, it still cannot position itself strongly in favor of an embargo. Joe Biden, the President of the United States, did it. But Europe remains much more reluctant to this idea. This is why the price of a barrel of oil has calmed down slightly. Beware, however, of the volatility of oil prices, which are extremely dependent on upcoming European decisions and the progress of the war in Ukraine. The latter had familiarized with the $140 Sunday, March 6, a few euros from the 2008 record. That is an increase of 33% of the barrel of oil since the first clashes in the Donbass. In this unprecedented context, the member countries of the International Energy Agency (IEA) should release no less than 60 million barrels of oil of their reserves. One objective, to stabilize a market in panic.
So, should we expect a further rise in fuel prices in France, when the prices charged are already reaching record highs? Absolutely. The purchasing power of low-income households is likely to take a hit. The price per liter now easily exceeds 2 euros, a finding that should become widespread throughout the country, from next week. Fuel prices being strongly indexed to the price of a barrel of oil, de facto, a constant increase in prices at the pump is to be expected. French consumers could well be the first victims of a potential embargo. Difficult for Europe to turn around quickly, alternatives are possible, but they will take time before being put in place.
The war in Ukraine casts doubt on the supply and price of energy. Aside from gas, one question remains central and arouses curiosity, what is the price per barrel of oil in this mess? Rising almost constantly since December 2021, the price of a barrel has reached the price of $109 Friday, March 11, 2022.
When you fill up with gas, the taxes represent 60% full. And these taxes, they, in spite of the war in Ukraine, fluctuate rather little. In particular the domestic consumption tax on energy products (TICPE), which simply represents the fourth revenue of the State, behind VAT, income tax and corporate tax. the fuel price leaving the refinery, it corresponds to 1/3 full of gasoline. Notably influenced by the price of a barrel of oil on international markets. Gas station attendants will have no choice but to pass on this increase to the price per litre.
Keep in mind that there is a lag time between the increase in the purchase price of a barrel of oil and the real impact on prices at the pump. This time varies 8 to 10 days about. In an attempt to curb this phenomenon, several aids have been put in place and distributed by the Government. In particular the inflation bonus granted to 38 million low-income households, as well as the revaluation of the mileage scale for 2.5 million tax households. The threat of a embargo European on Russian gas could cause the price of a barrel of oil to explode at $300or even more.
For a month, the price of fuel per liter has increased, on average by 52 cents in France to reach €2.25 per liter throughout the country.
According to INSEE, the Russia is the 3rd world producer of oil with 10 million barrels per day, of which 2 million transit to Europe. The Franceshe matters 9% of its crude oil since Russia. And the countries which could substitute the major role of Russia in the export of oil are not legion. Nigeria, Angola and Libya, for example, are not even meeting their own production targets. the Nigeria (9.6% of oil imports in France), theAlgeria (10.3%), and theSaudi Arabia (11.8%) remain crucial trading partners for France to whom the government could turn more to supply the country.
“We have significant strategic oil stocks which cover almost three months of consumption and allow us to deal with supply disruptions. The French are not at risk of running out of fuel or gas for heating in the coming months” declared the Minister for the Ecological Transition, Barbara Pompili on February 23. The European Union could even decide to release part of its strategic oil stocks to counter the rise in fuel prices in the face of this major market disruption. A decision taken only three times in history, for example after Hurricane Katrina in the United States.