Saturday, July 2, 2022

Why will diesel be more expensive than petrol?

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Shreya Christina
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For the sixth week in a row, diesel is more expensive than petrol. The average price is 1,911 euros, the historical maximum, while that of gasoline is 1,878 euros, also the highest figure in history in Spain. The European Union Oil Bulletin presents this data, which represents the third straight week of gains, leading fuels up 2% from seven days ago. No one knows exactly when prices will fall, smoothed out by the 20 cent government rebate 20 cents government rebate, but what is entirely possible is that diesel will never again be cheaper than gasoline.

“The problem is that diesel has historically been cheaper because the subsidies for this fuel were higher than for petrol,” explains Antoni Cunyat, associate professor of Economics and Business at the University of Groningen. Open University of Catalonia (UOC)† With less subsidies, diesel becomes more expensive because “not all oil is used to make diesel, but a higher quality crude is needed and the one obtained by which techniques -such as ‘fracking’ or hydraulic fractionation-is not useful”, he said. adds. “It takes more oil to make a liter of diesel than to make a liter of gasoline,” he concludes.

Diesel supply shortage

This week, according to the Oil Bulletin of the European Union, the price increases have been prompted again by the rise in the price of oil, with a barrel of Brent, a benchmark in Europe, bordering $105 and West Texas, a benchmark in the United States, the $103. . It should be remembered that West Texas traded negatively at the worst moment of the pandemic. But even if the price of crude oil fell, that wouldn’t necessarily mean that diesel would too. It all depends on the oil available to produce diesel.

“In the future, there could be a problem with the supply of diesel because the higher-quality stocks are smaller and lower-quality oil will have to be used and production will be affected,” said Cunyat, admitting the war in Ukraine has started. accelerated. Process. Restricting oil from Russia – Europe’s largest diesel supplier with 25.5 million tonnes – reduces crude oil on the market, stocks fall and the price of fuel, especially diesel, rises, he says.

“This decline in oil availability, along with the fact that there is more low-quality crude than high-quality crude, causes the price of diesel to rise or stay the same even as the price of a barrel falls. because there isn’t enough to produce diesel,” he concludes.

The future of diesel

For a dark future fueled by illogical policies based on electoralism and flashy phrases rather than emissions and pollution data, there is a new problem for diesel, whose price may be doomed to stay above gasoline forever. †

Market forecasts and Cunyat cannot confirm that this will be the case, but the UOC expert can assure that this will be the trend in the future unless new huge oil deposits are suddenly found. a lot of quality”. “The difference between the price of diesel and gasoline will widen and widen as the oil shortage worsens.”

At the time of writing this article, the costs for filling an average 55 liter tank of a diesel car are 94 euros, including the national discount. If the bonus is not applied, which will be abolished on June 30, the costs would skyrocket to 105 euros.

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