The change in fuel prices at service stations this summer is seen by the Government as an additional point of pressure due to the end of aid to prevent inflation, which ends on December 31. At least, this week , a segment of prices has given a little respite after the extremely low evolution marked by oil in recent weeks. Gasoline costs have fallen in the past seven days for the first time in three months, crude remains below the high it set in September and only diesel is running its own pace with rising prices.
That is the X-ray that now faces the Executive in the last quarter, where it is necessary to decide – if the current Cabinet in office, or the one composed if there is an investiture of Pedro Sánchez – to extend the aid to inflation will be curbed. If the barrel of Brent moves in the range between 80 and 90 dollars, it will reduce the need to activate discounts at gas stations for some groups. This Wednesday, the price of Brent closed at 85 dollars.
The impact of fuels on the economy in general is one of the risks that Spain has in determining the evolution of its economy and the inflation that has a strong connection to the prices of gasoline and diesel. This week gasoline showed the first sign of stopping the spiral it has been in all summer. It has been shy, yes, almost 0.45%, to an average of 1.75 euros, although it has broken the growth that keeps the pockets of drivers, according to the latest EU Petroleum Products Bulletin.
The same does not happen with diesel, which still continues to rise in price and approaches gasoline, although it is subsidized with a tax of up to ten euro cents per liter. This past week, automotive diesel became more expensive by another 0.1% to 1.687 euros per liter, a level not seen since the end of January.
With the decline in fuel, an upward trend led to an increase of more than 10% since the end of July. However, diesel has continued this unstoppable upward race since the summer began and has already accumulated an increase of 17.3% in the last three months.
In addition, the price of both fuels is broadly consolidated above the levels where it was before the outbreak of the war in Ukraine due to the invasion of Russia, which began on February 24, 2022 and where, in the case of diesel, It is 1,479 euros per liter and for gasoline, 1,594 euros. In any case, they have not reached, despite this upward trend in recent months, the high they registered more than a year ago; In July, when gasoline reached 2,141 euros and diesel 2.1 euros.
If they continue at these levels, the Government will reject the expansion of assistance to drivers who refuel, such as the 20 euro cents established from March to December last year in general. The Executive continues to study what measures to continue from January 1, 2024, which is when the current multi-million dollar support program to overcome the crisis ends. The vice president of the economy, Nadia Calviño, limited herself to underlining about this in recent days that “between now and the end of the year” the measures considered the most appropriate to take, “always which thinks about a responsible fiscal policy and the best use of public resources.
Black gold is available
The relaxation of gasoline is explained by the costs of petroleum products, a drop that is more obvious than that of diesel. A barrel of Brent traded at $86 on Thursday, although last week it began to decline from $95 reached almost seven days ago. The cost reduction comes after OPEC+ (partners of the cartel with other major crude oil producers) chose to continue the cuts in their exports until, at least, the end of the year.
That production deficit should drive up prices. However, the fear of a slowdown in demand is more weighted in the context of “higher rates for higher” announced by the central banks, the ECB of the euro zone and the FED of US.