Petrol and diesel prices: still increases. Now what happens

After the cut in excise duties it seemed that the price of petrol, diesel, LPG and methane was under control, but the combined effect of several factors is pushing fuels towards the other. Because? And how long will this bullish phase last? Here are some answers

Andrea Tartaglia

@
andrea_tarta

– Milan

Price of gasoline on the rise, like that of all auto fuels. Official Motors it already has talked about in detail, but what are the reasons for a surge that seemed to have been averted, or at least weakened, by the cut in excise duties decided by the government and valid for now until July 8? This is not a simple answer because there are several factors that affect the price of petrol, diesel, LPG and CNG cars. Just a couple of months ago diesel cost more than petrol, but today the ratio has reversed but both fluctuate and grow more than LPG and methane. To better understand what is happening, also assuming what we should expect for the next few months – those of the summer exodus – we spoke to Gabriele Masini, director of Daily Relaya newspaper dedicated to energy.

Multiple reasons, one effect

The increase in the price of gasoline depends on factors which, in some cases, occur on the other side of the world. China’s exit from the regimes of lockdown from the Covid-19 pandemic, the last significant one that paralyzed Shanghai, has triggered a vigorous recovery in demand that has pushed up the price of refined products around the world. Petrol is also affected by the beginning of the American “diving season”, the end of school and the beginning of holidays for many families who are known to use cars with high cubic capacity and a considerable demand for petrol. In both cases a “butterfly effect” that is felt on oil markets around the world, growth in demand not satisfied by an offer limited by the maintenance in progress in many refineries. The effect of the embargo that the EU countries have decided on Russian oil is also beginning to be felt, the stop will take place from 2023 but the price of petrol, diesel, LPG and methane (linked to crude oil prices) is already in ascent.

LPG AND METHANE

Fuel prices on the rise, yes, but not uniformly. From the Istat surveys of May, the national consumer price index, for the most part inflation, recorded an increase of 0.9% on a monthly basis and of 6.9% on an annual basis. In the case of fuels, diesel (from + 23.1% to + 25%; + 2.2% growth from April to May) and petrol (from + 13% to + 13.9%; +1 , 8% on the month), the others slowed down (from + 46.8% to + 43.6%, -2.3% in the economic situation). The explanation lies in the various market mechanisms, for example LPG arrives in Italy largely from Algeria, undergoing price updates only once a month, with the result of being less volatile and more stable. For methane, the reason is to be found in the stabilization of international markets after the turbulent phase recorded following the invasion of Ukraine, when it seemed that Russia could block natural gas exports to Europe. Moscow gas will continue to arrive in the coming months even if with decreasing volumes, it will take a couple of years to become independent.

A “HOT” SUMMER AWAITS

You understand the reasons that triggered the increases, the last passage with Gabriele Masini we dedicated to the forecasts for summer 2022: what to expect from fuel prices? Everything suggests that the bullish race will not stop there, since the reasons for the increases remain standing. And if the organization of oil-producing countries Opec has filtered the desire to increase production to cool prices, the effect of the European embargo on Russian crude oil could be felt more, a situation that risks costing motorists home. Since the increase in the price of fuel generates more revenue for the Italian tax authorities, the government suggests that it could take new measures against expensive gasoline. In this sense, Maria Cecilia Guerra, Undersecretary for the Economy, expressed herself: “It is very probable. Trivially, the increase in prices also increases the revenue from VAT, which we do not want to put in the coffers of the state, but – explained Guerra – we use it to lower excise duties and keep the price calm ”.





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Petrol and diesel prices: still increases. Now what happens


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