Why are fuel prices falling?

Why are fuel prices falling?

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For the second week in a row, fuel prices are down. This is explained by the government rebate but also by the price of a barrel of oil which has fallen sharply.

Perhaps you have noticed in recent days, the price of fuels is decreasing. Certainly, the fuel discount applied by the State is one of the factors of this decline. The financial boost of 18 cents makes it possible to reduce the price per liter, to the delight of motorists. More surprisingly, the price of oil is also falling. And this, despite a very tense economic and geopolitical context.

Why is the price of Brent falling?

Last March, the liter of unleaded and diesel had reached record levels. There were then fears of an irremediable price spike due to the conflict in Ukraine and the shortage of raw materials. If we should not rejoice too quickly, it is clear that this very large increase did not take place. It is even the opposite that takes place. Because for almost two weeks now, the price of a barrel of oil is falling which makes it possible to limit the price at the pump in France. Several factors explain this decline. First of all, China has increased confinements in recent weeks, which has resulted in a reduction in travel and therefore in oil needs. On the other hand, Joe Biden’s announcement to unlock more 180 million barrels of oil of the American reserve relieved the market.

A still fragile market

While this trend is encouraging, international bodies remain skeptical. First, because the market remains fragile. Indeed, once the containment periods have passed, China will resume production with a high oil demand. Moreover, the war between Ukraine and Russia still has a strong influence on the price of a barrel of oil. The International Energy Agency, for its part, fears a raw materials crisis in Europe including a fuel shortage. Like we explain it to you on Autoplus.fr, Russia produces the majority of diesel in Europe. The prospect of a disaster scenario where the price of a barrel would exceed the $150 is therefore still relevant.

Increasingly expensive fuel prices every year

Furthermore, even if the price of fuel has fallen in France over the past two weeks, it still very high. On average, the liter of unleaded revolves around 1,74€ and the price of diesel around 1,82€. This price includes the discount of 18 cents applied by the government. The liter of unleaded is therefore found around the €1.92 and that of diesel around €2.00 excluding discount. If the war conflict in Ukraine is the main reason for these high prices, the trend is up since many years. Indeed, over the last ten years, the average price of diesel has increased by more than 20 cents. This is notably due to the increase in taxes and the revaluation of the TICPE on diesel.

This trend therefore confirms that fuel prices are not about to fall in the coming months.

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