From Prague to Brno by 100 crowns more expensive. Fuel prices are skyrocketing, with discounts not on the horizon
Motorists who have been coming to refuel at petrol stations in recent days are facing unpleasant glances at price boards. Fuel prices are rising almost every day and are starting to approach the 40-koruna limit. Gasoline and diesel are thus the most expensive in the last seven years, and the prospects that their prices could fall again are not near.
The increase in prices is very visible especially in the year-on-year comparison. In 2020, with the advent of the coronavirus crisis, fuel prices fell. For example, this year’s trip between Prague and Brno by the Škoda Octavia would now be up to a hundred crowns more expensive than last October.
In addition, further price increases will follow in the coming days. “In the second half of October, we expect further growth in petrol and diesel prices. Diesel should increase by another 80 pennies, which is the result of a sharp rise in natural gas prices and the associated higher demand for fuel oil. Gasoline should increase in price by more than 60 pennies, “said Finlord analyst Boris Tomčiak.
Other analysts will also draw attention to the rise in prices. “Petrol and diesel in the Czech Republic will become more expensive in the next seven days, in the range of around 30 pennies per liter in the case of petrol and 50 pennies per liter in the case of diesel. Diesel is becoming more expensive than petrol, as the heating season is gaining momentum and Europe is also going through a gas crisis. Heating oil is a relatively close substitute for gas, so as its price rises, the demand for it rises, which means the price of oil as such rises, “opens Lukáš Kovanda, an economist at the Government’s National Economic Council (NERV).
In winter, according to him, fuel could reach the magical limit of 40 crowns per liter. In recent months, the Czech Republic, as well as other countries, have been struggling with unpleasantly rising inflation, which was 4.9% in the Czech Republic in September, and in some countries it was even higher. And it is diesel and gasoline that are one of the commodities that contribute to overall high inflation. “Even now, however, the rise in fuel prices, which rose by more than 20% year on year in September, is the biggest contributor to accelerating headline inflation. At the end of the year, it will attack up to a seven percent level, “Lukáš Kovanda predicts the unpleasant development in the area of prices.
What is the cause of the jump in fuel growth?
“The rise in fuel prices is directly due to the already mentioned rising oil prices. Its price continues to rise in October, with Brent crude oil adding another more than six percent of the price increase since the beginning of this month. Nevertheless, the effect of rising oil prices is not dampened by the strengthening of the koruna against the dollar, as the mutual exchange rates of the two currencies are mostly where they were at the beginning of October. Fuel prices in the Czech Republic are usually delayed by two to three weeks due to the development of oil prices, ”describes Lukáš Kovanda one of the reasons.
Another reason is the growing demand for oil and oil products. As the pandemic weakens and life returns to normal in the rest of the world, mobility and consumption increase. The price of diesel is rising more significantly. According to analysts, this is due to a sharp rise in the price of natural gas, which is associated with higher demand for fuel oil.
Another reason is the energy crisis, when electricity prices are rising worldwide and in the long run to favor renewables at the expense of fossil fuels. “Last but not least, the reason for the rise in oil prices is that Russia, Saudi Arabia and other large traditional oil miners, who are drilling holes in their state budgets after the pandemic, are not deliberately releasing oil production as much as they could. Because oil on the world market does not come in such a volume as to satisfy all demand at the current price, its price is growing significantly, “adds Lukáš Kovanda, as the world’s major players in the field of oil exports are currently behaving.
According to the International Energy Agency (IEA), the increase in demand in the last quarter led to the largest depletion of oil stocks in eight years. Nevertheless, the level of stocks in OECD countries has remained since the beginning of 2015.
“The sharp spending on clean energy is a way forward, but it must happen quickly, otherwise global energy markets expect a difficult path,” the agency said in reports. The IEA considers the recovery from the pandemic unsustainable. It relies too much on fossil fuels, the agency warns ahead of a climate conference to be held in London next month.
Motorists last paid more for petrol in the second half of November 2014, the average price of a liter of diesel now exceeded 34 crowns for the first time since December 2014. A year ago, Natural 95 was more than 7.50 crowns cheaper. crowns less.
Average fuel prices in the Czech Republic as of 13 October 2021 (in CZK / l):