Why is gasoline so cheap right now?
The fuel price should be skyrocketing: It's vacation season, an end to the war in Ukraine is not in sight, and the situation in the Middle East threatens to escalate. Yet, gasoline and diesel are as cheap as they've been in a long time. Even experts are surprised.
Anyone filling up at the pump these days might wonder: With diesel at about 1.60 euros per liter, it's as cheap as it was 13 months ago. And gasoline is at 1.70 euros, a level not seen in half a year.
This is a boon for vacationers - and a rarity, especially given the ongoing war in Ukraine and the escalating conflict in the Middle East. These factors have typically led to price increases in the past.
So, how is this possible? Hagen Reiners, an oil price expert at Argus Media, explains: "The answer to this seemingly simple question is actually quite complex. Generally, we can say that the prices for the raw product, crude oil, have decreased somewhat." Another factor is that the profit margins for refineries, especially for diesel, have significantly decreased in recent months.
"The demand for crude oil is currently estimated to be somewhat sluggish, for example due to weak economic data from the USA," says Reiners. This leads to cheaper end products, diesel and gasoline, at the pump. An important factor is also the Organization of the Petroleum Exporting Countries (OPEC). "OPEC is actually planning to increase production. These were reduced in October last year to stabilize the high price."
Weak World Economy
Andreas Höhl, an expert on the topic at the ADAC, says: "The low fuel prices are due to favorable conditions, especially the oil price. North Sea oil, which is relevant for us, had a very low price of about 76 to 77 US dollars per barrel last week." However, the price is currently rising again. The previous price drop was mainly due to a weak world economy, particularly in the USA, China, and Europe.
"The current moderate price increase could be related to the growing tensions in the Middle East. Concerns about further escalations there can increase the oil price. In general, fuel prices are low when the oil price is low," confirms Höhl, agreeing with Reiners. "Last week marked the lowest point for gasoline in the past half-year and for diesel in 13 months. That was good for drivers, especially now during the travel season. Whether the prices will stay this low remains to be seen."
In contrast to the expected surge due to global conflicts, diesel engine fuel remains surprisingly affordable at approximately 1.60 euros per liter, matching its price from a year ago. Despite the ongoing tensions in Ukraine and the Middle East, gasoline and diesel engines continue to offer lower prices than they have in several months.
