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Fuels are getting cheaper. Gas stations blow inflated margins

Pumpers are once again “magical” with margins. Diesel prices are 10 crowns per liter higher than on the eve of the invasion, even though oil is now traded at a comparable price in crowns as it was then.

The price of fuel in the Czech Republic fell significantly in the past week. Gasoline was sold nationwide yesterday for an average of 41.38 crowns per liter, i.e. 62 pennies per liter cheaper than a week ago. Diesel became even cheaper by 1.50 crowns per liter, to 44.49 crowns per liter. Both petrol and diesel are now the cheapest they have been in over a month.

In the next seven days, fuel prices will continue to drop significantly, especially diesel. Gasoline will be cheaper by 60 halers per liter, diesel by another 1.50 crowns per liter. Particularly in the case of diesel fuel, not only is the drop in oil prices on world markets and the price of the given fuel on the raw materials exchange in Rotterdam visible, but also the fact that domestic pumpers are now “blowing” exorbitant margins.

The price of petrol and diesel is also coming together. The difference between the price of diesel and gasoline is now only about 3.10 crowns per liter, while it was also around five crowns. The difference is also due to the objective reason of the shortage on the European market, especially with diesel fuel. This is caused by the approaching EU embargo on the import of Russian oil, or of petroleum products, which will come into effect on December 5, 2022, or February 5, 2023.

Lukáš Kovanda: Due to the impact of the missile in Poland, the zloty is weakening, stocks and oil are falling in price. And Druzhba is still standing

Opinions

Today, the Polish zloty depreciated against the crown to its weakest level in the last month. This morning it was also sold for less than 5.09 kroner, i.e. the cheapest since October 17 of this year, according to Bloomberg data. In the long term, the Polish currency is still close to its all-time record lows against the koruna. It fell to an absolute minimum on October 7 this year, when it was sold for less than 5.01 crowns, points out Trinity Bank chief economist Lukáš Kovanda.

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Nevertheless, the prices of wholesale fuels are now falling. Nafta has become cheaper on the exchange in Rotterdam since the beginning of November in crown terms by almost fourteen percent. Brent oil has been cheaper on world markets since the beginning of the month in crown terms by more than ten percent.

On Friday morning CET, Brent crude oil was sold in crowns for less than 2105 crowns per barrel. This is its lowest price since February 23 of this year, that is, since the eve of the invasion of Russian troops into Ukraine. For comparison, on that day, gasoline in the Czech Republic was sold on average for 37.43 kroner per liter and diesel for 36.39. At the comparable price of a barrel of Brent in crowns, gasoline was then about four crowns cheaper than this Friday. At the comparable kroner price of oil, diesel fuel was then more than eight kroner per liter cheaper than it is now. And yet in the meantime, in June, there was a reduction in consumption tax, and therefore also VAT, on diesel. Consumption tax fell by 1.50 crowns per liter.

Donfeng cars

Europe as an automotive powerhouse? No, China

Money

In just three years, Europe could become a net importer of cars. It is still the largest exporter. Cheap electric cars from China are to blame, according to a PwC study.

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Lower demand for oil

The cancellation of the mandatory mixing of bio-components, which took place from July this year, could have made fuel cheaper since then, even if it was only in the range of tens of pennies per litre. As a result, diesel is now de facto priced at petrol stations by around ten crowns per liter more than on the eve of the invasion, even though the price of a barrel of Brent oil in crowns is comparable to what it was then. This means that gas stations, but also refineries and distributors have excessive margins, especially in the case of diesel. It only partly explains the noticeably higher price at gas stations than the then higher crown price of wholesale fuels on the Rotterdam stock exchange, where diesel is still less than 25 percent more expensive in crown terms than it was on February 23 of this year.

The continued intervention of the Czech National Bank for a stronger koruna helps to suppress the import prices of oil and oil products. As part of this, the CNB has already issued around 800 billion crowns from its foreign exchange reserves since the middle of May this year.

The price of oil and oil products is falling despite impending embargoes due to the deteriorating macroeconomic outlook in many countries around the world. The deterioration is mainly caused by the destruction of demand, the reason for which is primarily the high cost of energy. This forces companies and businesses to limit production, while at the same time reducing the purchasing power of the population. In the outlook, both are reflected in a relatively lower demand for oil and fuels, which creates downward pressure on their current price. The zero-tolerance covid policy in China is also putting pressure on priceswhich is the world’s largest oil importer, and the ongoing war in Ukraine, which represents significant geopolitical uncertainty.

Druzhba oil pipeline, Hungary

Russian oil is already flowing through the company again

Markets

Russian oil is once again flowing through the Druzhba pipeline to Hungary, Slovakia and the Czech Republic, the parties concerned announced. However, after the shutdown, the pipeline is still working with reduced pressure. Druzhba brings Russian oil through Ukraine to Hungary, Slovakia and the Czech Republic, but it has been out of service on Ukrainian territory since Tuesday evening due to the missile attack.

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Gasoline and diesel prices in the Czech Republic are currently slightly below the EU average, results from data from the European Commission. The price of gasoline in the Czech Republic is comparable to the prices in Slovakia and Austria. Gasoline is, however, unusually more expensive in the Czech Republic than in countries such as Italy, France or Croatia.

In a total of thirteen EU countries, gasoline is now cheaper than in the Czech Republic. It is then more expensive in thirteen EU countries than in the Czech Republic. Diesel is cheaper in twelve EU countries and more expensive in fourteen. The price of diesel in the Czech Republic is comparable to the prices of the same fuel in Slovakia or Lithuania. Diesel is currently cheaper than in the Czech Republic, Italy or France, which is unusual. This situation is due to the tax breaks of the mentioned countries, which they introduced in order to mitigate the effects of high energy costs.

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