Dusseldorf For the first time since the highs of the past few days, prices at gas stations fell slightly on Wednesday. Nevertheless, gasoline and diesel still cost well over two euros per liter and thus around 50 cents more than before the Ukraine war. This is particularly surprising in view of oil prices. After their drastic rise, these have already fallen back sharply.
Economics Minister Robert Habeck (Greens) and many experts blame the oil companies Shell, BP, Exxon Mobil and Total, which supply by far the most gas stations in Germany with their refined products. Habeck recently said that it should not be the case that companies would make “unreasonable profits” from the current situation. He has asked the Federal Cartel Office to examine the situation.
But do German drivers really have to dig deeper into their pockets because refineries want to make more profit? The answers to the most important questions.
Before diesel or petrol ends up in the tank via the pump, the crude oil for the production of the fuel has to be bought at world market prices. And they have increased more than by leaps and bounds in the past few weeks. When war broke out between Russia and Ukraine, the price of a barrel of Brent North Sea oil jumped from around $90 to $130 at one point, and is now $105.
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During the same period, fuel prices for Super E10 jumped from EUR 1.75 per liter to a record average price of EUR 2.20. That is an increase of 25 percent within a few weeks. Diesel prices have increased even more: from 1.67 euros per liter to 2.32 euros in the meantime.
So while the sharp increase corresponded to the course of crude oil, fuel costs are now falling much more slowly than the price of crude oil. The price of oil fell by almost 25 percent in a week, but diesel prices fell by only three percent.
Why is the oil price falling?
After the corona pandemic subsided, the global economy recovered much faster than expected. This has also caused the demand for oil to skyrocket. As a result, global production was scarce for a while, and two years later oil prices rose again noticeably. Russia’s invasion of Ukraine increased uncertainty in the market and caused prices to rise further.
Russia is one of the largest oil producers in the world and Germany’s most important supplier. Because more and more companies were turning their backs on Russian oil and the fear of an oil embargo also plagued the rest of the world, prices climbed to a new 12-year high in early March.
However, the high prices also ensured that fracking technology in the USA is profitable again and that companies there are increasingly ramping up their production. At the same time, the producing countries Iran and Venezuela, which have been sanctioned for years, could increasingly come into play again if they turn their backs on Russia. This eases the demand side, as does China’s falling oil demand due to the increased number of corona cases.
Why are fuel prices still at record levels?
Fuel and crude oil prices are not linked to each other. Nevertheless, it can be observed with some time lag that the prices at the petrol stations are catching up with falling crude oil prices. The price difference is currently still massive, criticizes ADAC spokesman Andreas Hölzel: “We have been observing a significant drop in the price of crude oil for over two weeks. However, fuel prices have not followed the decline.” Fuel prices have fallen by just a few cents, “but there is still a lot of room for improvement here,” criticizes Hölzel.
It is true that one has to take into account that the Ukraine war will lead to special effects and upheavals. But the mineral oil companies with their refinery business certainly also made the big difference. Indeed, refiners’ profits are increasing, but so are their costs.
Who profits from the high fuel prices?
Basically, a significant part of the price per liter goes to the state in the form of taxes and duties. The energy tax on petrol alone accounts for almost 65.4 cents. In addition, there is the CO2 tax and finally 19 percent VAT on the total price. Since fuel prices are very high at the moment, the state also earns considerably more money.
Anything in between is roughly the margin. One to two cents per liter remain with the gas station operators themselves, the rest goes to the refineries and dealers. “The margins of the refineries have increased,” confirms an industry insider. And certainly the producers would also be making a good profit at the moment.
According to the data from the comparison site benzinpreis.de, the margins are now at a record level of between 35 and 50 cents per liter of petrol. This value remains after all taxes, duties and the price of crude oil are subtracted. Before that, the margin fluctuated between 15 and 20 cents for years. In fact, it has more than doubled since the outbreak of war.
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The petrol station operators have none of this. They sell significantly more fuel when prices are lower. In addition, their margin is contractually fixed. So it’s the refiners who benefit.
Nevertheless, petrol station operators show understanding: In Germany there is currently an extreme special situation, says Carsten Müller, head of the Cologne petrol station operating company Kuttenkeuler. The company operates 64 petrol stations around Cologne. Because the crude oil price on the world market has little to do with the product prices for diesel, heating oil and the like in Germany at the moment. This is mainly due to the war in Ukraine.
What does Russia have to do with it?
With almost 36 percent of all oil imports, Russia is the most important supplier for Germany. The rest come from Norway, Great Britain and a dozen other countries. Last year alone, the Federal Republic bought four million of a total of twelve million tons of diesel from Russia. While petrol is produced in German refineries themselves, diesel is dependent on imports.
BP, Shell and many other big oil companies have already announced that they will no longer buy Russian oil. “Many ships that arrive in Rotterdam, Antwerp and so on from Russia are now being sent on,” report industry insiders. The products have to be procured elsewhere, which basically does not make it cheaper.
Because the refineries had reduced their production due to the pandemic, the stock of so-called middle distillates, i.e. products such as diesel and heating oil, was low even before the war. “There is no shortage of crude oil, but there is shortage of products. At the same time, the costs of importing and sourcing from other countries are increasing because Russia is absent,” says a spokesman for the Fuels & Energy trade association (en2x).
Almost all refineries and traders suspended their spot business last week. Shell, BP, Total and others no longer offer additional products wholesale in Germany. From now on, only those who have a fixed contract will be supplied.
The situation is particularly tricky for Germany because hardly any other country is so dependent on the Russian oil tap. Two of the largest refineries in Germany obtain their oil 100 percent from the Druzhba pipeline in Russia. A hacker attack on the German subsidiary of the Russian oil company Rosneft also caused delivery problems in one of the two Druzhba refineries (Schwedt). This is also reflected in the price of diesel.
Why is diesel more expensive than petrol?
As a product, diesel has always been more expensive to produce than petrol. It’s only cheaper at the pump because less tax is levied on diesel. In addition, while petrol is produced in German refineries itself, Germany is dependent on imports of diesel, primarily from Russia.
The move away from Russian oil products has therefore significantly limited supply. Switching to other suppliers is possible, but takes several weeks and entails higher prices.
The factory in Saxony-Anhalt is directly dependent on oil from Russia.
(Photo: dpa)
Because consumers bought heating oil en masse after the start of the war, diesel prices continued to rise. From a chemical point of view, diesel and heating oil are almost identical. The massive rise in gas prices also meant that refineries have curbed diesel production in particular because it was simply too expensive for them. Without hydrogen, which is obtained from natural gas, diesel cannot be produced from crude oil. This, too, drove prices up further and ensured that diesel was more expensive than petrol at the filling station for the first time.
Will fuel remain as expensive as it is now?
Even if they don’t fall as much as the price of crude oil, the cost of petrol and diesel have already fallen in the past few days. “We are currently registering a slight drop in fuel prices, which is continuing today, albeit more slowly than yesterday,” believes the ADAC.
Whether the price per liter will fall back to pre-war levels is something nobody wants to say at the moment. “We see a very large gap between international quotations on the oil market and domestic purchase prices. But we also see that this gap is getting smaller every day,” says gas station operator Müller.
Why is refueling so much cheaper in neighboring countries?
While Federal Finance Minister Christian Lindner (FDP) is thinking about fuel discounts, German motorists are flocking to Poland, the Czech Republic and other border regions. Here refueling is sometimes cheaper by one euro per liter.
Poland’s government has introduced significant tax cuts at gas stations in view of the record energy prices. The energy tax was significantly reduced and the value-added tax on fuel was reduced from 23 to eight percent. On average, fuel in Poland is 50 to 60 cents cheaper than in Germany.
More: Electricity or fuel: what is cheaper for car owners?