Posted on Oct 11, 2021 4:45 PMUpdated Oct 11, 2021, 5:24 PM
New record. A liter of diesel has never been so expensive in France. The average price at the pump reached 1.5354 euros on average last week, according to data from the Ministry of Ecological Transition released on Monday. The previous peak, recorded in October 2018 at the start of the yellow vests crisis, has been exceeded. SP 95 gasoline, much less used than diesel, was marketed at 1.6073 euros, still a few cents from the record of 1.6664 reached in 2012.
The increase over one year is spectacular (+ 28% for diesel), because it takes as a basis of comparison a period when oil prices collapsed with the health crisis. The barrel of Brent has rebounded sharply since then. It’s worth over $ 82 since last week, a year-over-year surge of over 100%.
Changes in crude oil prices are almost the entire reason for the increases and decreases in prices at the pump, as the government froze fuel taxes in 2018. The repercussions are rapid. At the end of a week, the evolution of the wholesale price of refined diesel is already transmitted for half of the retail prices invoiced to motorists, shows a note from the Banque de France.
“It takes an average of eleven working days to observe 90% of the transmission of cost variation to prices, and the total repercussion to fuel prices takes about twenty working days”, observes this study. Prices adjust “at the same speed” upwards and downwards, notes the Banque de France, which analyzed data from 11,000 service stations over twelve years (2007-2018). Taxation acts as a shock absorber by slowing down developments in both directions, because it represents around 60% of the price paid by the motorist.
This quick adjustment is explained in particular by the competitive game. “Competition between service stations is stronger in France than elsewhere because of the weight of large-scale distribution, explains François Carlier, of the CLCV consumer association, except in specific catchment areas such as certain highways”.
Little impact on consumption
The bill weighs on the budget of households, especially the poorest. Fuel expenses absorb only 3% of the income of the wealthiest 10% of households, but nearly 10% of the resources of the 10% of the poorest families who own a vehicle, shows a study by the Climate Economy Chair from Paris Dauphine University.
The increase in prices has little influence on the volumes consumed. “A 10% increase in fuel costs translates into a decrease of only 2% to 3% in consumption in rich countries in the short term,” notes Raphaël Trotignon, economist at Rexecode. Households have little choice but to suffer the increase. “
Less fuel-efficient vehicles
Most motorists can only adapt marginally, for example by reducing their speed or by forgoing certain trips, or even by using the most economical car when they have several. Rising prices can have more of an impact in the long term, in particular by encouraging people to buy a vehicle that uses less fuel, or even electrics.
But gasoline and diesel prices have been particularly volatile in recent years, even without taking into account the health crisis, which confuses the message. French fuel expenditure thus hardly changed between 2015 and 2019, around 42 billion euros, show the latest statistics from INSEE available.
Perception of purchasing power
There remains the feeling. “The relatively frequent purchases of fuels and the mode of public display mean that their price is particularly followed by households, which affects their perception of inflation or purchasing power”, notes the study by the Bank of France.