Are you shocked by diesel at 2 euros per liter? Well, it will be a joke if this prediction comes true

Are you shocked by diesel at 2 euros per liter?  Well, it will be a joke if this prediction comes true

The increase in fuel prices seems not to have reached a ceiling. The aid of 20 cents per liter promoted by the Government of Spain has not stopped the problem. Analysts foresee an even more complicated scenario in the immediate future. Diesel at 2 euros per liter will become a little joke if the most pessimistic predictions come true.

In recent weeks we have witnessed how fuel prices have reached record highs. Gasoline and diesel have not peaked. In certain areas of the Spanish territory and, depending on the type of fuel, the barrier of 2 euros per liter has been far exceeded. Nor should we lose sight of LPG (Liquefied Petroleum Gas) and CNG (Compressed Natural Gas), since they are also more expensive than ever.

The aid of 20 cents per liter of fuel promoted by the Government of Spain has been practically a “band-aid” that has not tackled the root problem. It has not been able to stop the rise in prices. In such a complicated context, what forecasts are market analysts considering? The most pessimistic predictions that are on the table leave diesel at 2 euros per liter in a little joke.

Evolution of the average price of fuel in Spain in recent weeks

Has the price of diesel peaked? The forecasts that point to 3 euros per liter

Antonio Felices, President of the Andalusian gas station employers’ association, has granted an interview in which he has carried out an interesting analysis of the current situation in the sector and, what is equally important, has given some of the keys to the future forecasts that we They allow us to glimpse the different scenarios that are being contemplated. All this in the context of what Felices has described as a “perfect storm”.

In the interview, Felices highlighted that the Bank of America foresees a scenario in which a barrel of Brent reaches 200 dollars. Currently the price fluctuates between 100 and 120 dollars. And as if that were not enough, the dollar itself has the highest price in the last 20 years, so the depreciation of the euro also influences the rise in fuel prices.

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It is true that this is a very pessimistic forecast, but if it is reached, we will find ourselves in a truly terrifying situation. The price of a liter of diesel will reach 3 euros.

Evolution of the price of a barrel of Brent on May 24, 2022
Evolution of the price of a barrel of Brent on May 24, 2022

Fuel prices will remain high

Another factor that we must take into account, and therefore add to all these issues, is the fear that exists in the sector in the face of a hypothetical scenario of diesel shortage. The war situation in Ukraine has caused the closure or blockade of Russian diesel transport. In addition, the OPEC (Organization of Petroleum Exporting Countries) countries continue in their quota of 400,000 barrels per day and do not want to increase said production.

We must also not forget that The United States has decided to release part of its oil reserves as a measure to stop the rise in fuel prices. However, this strategy led by Joe Biden himself, President of the United States, cannot be sustained over time.

On the other hand, and from the Andalusian gas station employers, They foresee that the reduction of 20 cents in the price of fuel will be extended beyond June 30, 2022. “Everything indicates yes. The measure has a clear reason, which is to mitigate the economic consequences of the war that, unfortunately, seems to go on for a long time. And the logical thing is that the measure be extended while prices remain high, “said Felices.

Last but not least, Antonio Felices recalled that the tax burden on fuel is still very high. The Taxes represent 50% of the final fuel price. Therefore, it is a “goose that lays the golden eggs” for the State.

Source: The Journal of Jerez