Record Petrol Prices Being Faced By Motorists In Asia And Europe

Price of petrol and diesel at the pump are being pushed to or near record highs in Europe and Asia because of rising oil prices, rebounding fuel demand, and levies and as such motor owners in these regions may face high fuel prices for months to come.

The increase in road fuel prices comes as Europe and other parts of the world struggle to adjust to and contain rising electricity bills as the northern hemisphere enters winter. It is expected that consumer spending would be potentially hit while global economic recovery from the Covid-19 pandemic hit could be get jeopardized.

The prices of rad side fuel is anticipated to continue to be high for the rest of the year, as experts and traders estimate the price of Brent oil, the global benchmark, to remain around $85 per barrel.

“High fuel prices put pressure on overall price levels and poses a downside risk to the recovery in mobility and the economy in general,” said Kavita Chacko, a senior economist at CARE Ratings in India.

“The rise in transportation costs have been feeding into costs across segments and could be a dampener for consumer spending.”

Return of demand of petrol and diesel is surpassing supply as road traffic returns to pre-pandemic levels. Supply side contraction is a result of poor investments in fossil fuel, low refinery production, and delayed maintenance due to Covid-19 and logistical constraints.

According to data from RAC unit Fuel Watch, the average price of unleaded gasoline at the pump rose to 1.41 pounds ($1.94) this week, close to a high of 1.42 pounds hit in April 2012, in the United Kingdom, where disruptions in distribution networks triggered the country’s worst fuel crisis in decades in late September.

This implies that filling a 60-litre tank now costs 15 pounds more than it did last year, when the average price of gasoline was about 1.15 following a drop in demand because of national lockdowns.

According to figures from the Ministry of Ecological Transition, diesel prices in France touched a new high of 1.55 euros ($1.80) per litre last week while petrol prices in India, the world’s third largest user of crude oil, reached a new high of 106.89 Indian rupees ($1.43) per litre on Friday.

Price has been raised to 2.70 pounds per litre in some filling stations, such as one in London’s posh Chelsea neighbourhood, which is about $10 per gallon in the United States.

Consumer groups have reacted angrily to the near record prices, claiming that oil prices are nowhere near the 2008 peak of $147 per barrel, which would explain the latest increase at the pump.

Fuel providers, on the other hand, claim that the price hikes are little compared to the increase in crude prices.

While average fuel prices in the UK have increased by 21% since the beginning of the year, the price of Brent crude, the worldwide benchmark, has increased by 66%, according to a representative for the UK Petroleum Industry Association.

The rise in gas prices is also due to high fuel taxes in countries such as India, France, and the United Kingdom, where they account for nearly 60% of the retail price of gasoline and diesel, according to government and car services statistics.

“We already pay 50 billion pounds a year in tax on our motorbikes, cars, vans, and trucks,” said Howard Cox, founder of lobby group FairFuelUK. “VED, fuel duty, VAT on duty, insurance tax, VAT on repairs, parts, benefit in kind on company cars etc. That’s nearly 7p in tax for every mile travelled.”

According to the industry ministry’s weekly figures, the retail price of petrol in Japan climbed to 164 yen ($1.44) per litre this week, the most in seven years. So far this year, it has increased by more than 20%.

Consumers in Japan pay a 53.8 yen per litre gasoline tax plus a 2.8 yen per litre oil and coal tax. A 10 per cent sale tax will also be applied to the price.

(Adapted from Reuters.com)



Categories: Economy & Finance, Regulations & Legal, Strategy, Sustainability, Uncategorized

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