Since last Friday in many Italian distributors the price of gasoline has exceeded two euros per liter and it does not seem that with the beginning of the week things are improving, indeed: the increase in prices has not stopped and could continue in the next days, with significant consequences especially for road hauliers.
The Russian invasion of Ukraine is only one of the causes of the price increase, linked to the trend of many other indicators which in turn can be directly or indirectly influenced by the ongoing conflict. The situation is rather complex due to general uncertainty and above all because it is difficult to understand what the consequences of the heavy sanctions decided by Western countries and companies will be against Russia, one of the world’s largest energy producers.
According to theLook at fuel prices, an observatory of the Ministry of Economic Development, since last week the average price of gasoline at the national level had exceeded 1.9 euros per liter in self-service mode, the least expensive, while the average price of diesel is above 1.7 euros per liter. The prices in the “served” mode, both for petrol and diesel, on the other hand, have exceeded two euros per liter.
One of the causes of the increase in gasoline prices is the trend in the price of Brent, the oil extracted in the North Sea that serves as a reference for most of the world prices.
On Sunday, the price of a barrel of Brent was very close to the $ 140 mark, not far from the all-time high of $ 147.5 in 2008. After a slight drop in the last few hours, the price of Brent was still pretty good on Monday morning. high: between 127 and 130 dollars per barrel. Since the beginning of the year, the price of Brent has risen by almost 10 per cent and the trend has been growing particularly in the last two weeks, following the Russian invasion of Ukraine.
When the price of oil rises, so does the cost of gasoline and diesel, which are the result of the refining process of crude oil. The final cost of fuel is also determined by other factors, such as taxes imposed by the state, but usually the one that affects the trend over time the most is the price of oil.
One of the reasons for the rise in the price of Brent was a decision made last week by OPEC +, the alliance of 23 oil-producing countries led by Saudi Arabia and which also includes Russia: he confirmed of wanting to keep the plans to increase production unchanged, which foresee reaching 400 thousand barrels of oil per day. The decision was made despite the US request for a larger hike in an attempt to bring prices down.
Meanwhile, the 31 countries that are part of the IEA, the international energy agency, they decided to place an additional 60 million barrels of oil from their emergency reserves to send “a unified and strong message to world oil markets that there will be no supply shortages following Russia’s invasion of Ukraine”. At the moment, as can be seen from the trend in gasoline prices, the effects of this measure have not been there.
But the effect of the exchange rate between the euro and the dollar also affects the price of fuels: in recent days the indicator has clearly dropped to 1.09 (i.e. one euro was worth 1.09 dollars) with a trend rather negative. The exchange rate directly affects the price of gasoline because with a strong euro the cost of a barrel of oil is much lower. For example, in 2008, when the cost of the barrel had reached 144 dollars, with the favorable exchange rate for the euro, the final price in Europe was 97 euros. In recent days, however, with the price per barrel above 110 dollars, the unfavorable exchange rate has led prices to exceed the threshold of 100 euros per barrel.
In addition to the net price of the fuel, which also includes the logistical costs of transporting the fuel and the earnings of the gasoline pump operators, the final price of gasoline is also determined by excise duties, i.e. taxes. Excise duties exist in several European countries, but in Italy they are historically very high. Some of these are purpose taxes, introduced by governments to achieve certain objectives, some of which have long since been resolved such as reconstruction after the 1963 Vajont disaster, after the 1966 Florence flood, the 1976 Friuli earthquake , Irpinia 1980 and many others. The third component is VAT, which is calculated both on the net fuel price and on excise duties, effectively a tax on the tax.
Excise duties and VAT have a significant specific weight in defining the price. According to detection released by the Ministry of Ecological Transition on February 28, excise and VAT constitute 57 percent of the final price of gasoline, while the industrial price covers 43 percent. The percentages are similar if we look at the price of diesel: 53.5 per cent is made up of excise duties and VAT, 46.5 per cent of the industrial price.
The latest report from UNEM, the Unione Energie per la Mobilità, the association representing the main companies operating in Italy in the processing, logistics and distribution of petroleum products, exhibition that diesel in Italy costs 5.7 cents more per liter than the European average, but if excise duties and VAT are removed, the Italian industrial price is 7.8 cents lower. The same happens with petrol: the price is 3.9 cents more expensive than the European average, but without taxes, the industrial price is 6 cents less than in the rest of Europe.
According to Claudio Spinaci, president of UNEM, it is still early to understand what will happen to prices even if the invasion of Russia in Ukraine seems to have fewer direct consequences on the fuel market than that of gas, of which Russia exports a huge quantity in European countries.
All over the world, Spinaci says, there are very high strategic stocks of oil that can be used in case of need even to cope with supply reductions and limit international speculation. “After the experience of the 70s and 80s, oil has been structured in such a way as to absorb any crises and reductions in supplies also linked to geopolitical tensions”, he explained in a ‘interview a Four wheels.
Even if Italy were to eliminate oil imports from Russia, it could find alternatives more quickly than natural gas, which we import largely from Russia, on which 43 percent of all imports from abroad depend. “10% of the crude oil we import comes from Russia,” Spinaci said. “Our refining capacity is diversified: in 2021 we sourced from 22 countries, with 72 different types of crude oil. As already happened with the crises in Libya and Venezuela, it would not be a shock to replace Russia among our suppliers ».
–
