According to experts, diesel prices will continue to rise

Frankfurt am Main. The price of a liter of diesel has risen sharply within a week: from about 2 euros to more than 2.10 euros on Tuesday. Strikes by refinery workers in France are particularly striking at the moment. But the reasons for the price increase are more diverse. Experts assume that there will be a huge undersupply in the fourth quarter.

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Now the French government is losing patience. Finance Minister Bruno Le Maire said in a radio interview on Tuesday: “We have to find an agreement in the coming hours.” French drivers may not become the secondary victim of a wage dispute. In the neighboring country, four of the main refineries were out of action. The north and the Paris region are particularly affected. CGT union wants to push through wage increases of 10 percent. To offset inflation and share in the huge profits that the strike companies (Total and Exxon Mobil) are currently making.

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Long queues at gas stations

Le Maire threatened government intervention. This could force employees to return to their jobs. There is also the option to activate further amounts of fuel from the strategic reserve. What is happening in France is reminiscent of scenes from very poor countries: long lines at gas stations, drivers desperately driving around to get at least a few liters of outrageously expensive petrol. As a result of the strikes, which are now lasting for several weeks, at least a third of all petrol stations are without fuel.

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Nearly two-thirds of the refinery capacity has been shut down, causing a huge surge in petrol and diesel imports. This, in turn, has pushed up wholesale fuel prices across Europe, which was also felt by German motorists. Especially with the diesel.

But there are also other factors: “On the one hand, there are seasonal effects. Because the increased demand for heating oil, typical for the beginning of winter, always drives up prices in the autumn – and thus diesel prices,” said Steffen Bock, director of consumer information service Clever Tanken, the editorial network Germany (RND). the price of diesel has been pushed up this season by the replacement of gas.Industrial companies and power producers are increasingly using heating oil instead of the extremely expensive natural gas.

Weak euro and low stocks

The current euro-dollar exchange rate also plays an important role. Bock: “The dollar is very strong against the euro. This means that purchasing oil is mathematically more expensive for investors from other currency areas.” And finally, the decision of the oil cartel Opec+ to sharply reduce production volumes and thus the supply of crude oil from November 2022 will have an impact on price developments.

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Fuel shortage in France: government wants to intervene in weeks-long strike

The population is reacting more and more irritated to the lack of fuel. Commuters are especially affected.

The Clever Tanken boss’ forecast for the near future is pessimistic: “The current trend in fuel prices is unlikely to abate.”

Other experts take a similar view. Singapore consultancy FGE points out that stocks of diesel and kerosene – both chemically very similar to fuel oil – have fallen to their lowest levels since 2005 at five key transshipment points worldwide. This also includes the Benelux trade center ARA (Amsterdam-Rotterdam-Antwerp).

Massive undersupply in the coming months

The scenario from Energy Aspects, another energy consultancy, assumes that Europe will face a diesel shortage in the current fourth quarter, quantified at almost 1.2 million barrels (159 liters) per day. Analysts also blame maintenance work at many refineries in Europe and the US for the impending undersupply. In addition, in the course of the pandemic, many factories around the world have closed because the operators once assumed that demand would be permanently lower. And on the horizon is the agreed EU embargo on Russian petroleum products exported by sea. It starts in February.

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ARCHIVE - September 1, 2022, Brandenburg, Potsdam: The display in front of a gas station entrance shows the prices for petrol and diesel.  (to dpa

Not the last fuel price shock for motorists

Fuel prices, which have risen sharply in a short period of time, are a lesson in the global economy. Price shocks will become more frequent in the future. The result: switching to electric driving.

China could ease things. The communist government has significantly increased the allowable export amounts for refineries and traders of mineral oil. The Chinese economy is weak due to Covid lockdowns and inventories are full, Michal Meidan of the Oxford Institute of Energy Studies told Bloomberg. It is hoped that more exports will stimulate the domestic economy. But exports are well below pre-pandemic levels, emphasizes Rystad Energy’s Mukesh Sahdev. That is why China can hardly remedy the undersupply in Europe.

For local drivers of diesel cars, all this means that they have to be prepared for high fuel prices for a long time. According to data from Clever Tanken, the current price level of more than 2.10 euros per liter is no less than 60 cents above the value of last year.

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