Who benefits from the rise in fuel prices?

The armed conflict in Iran and the marked instability in the Persian Gulf region have driven up the price of crude oil worldwide. Just as happened in 2022 with the start of the Russian invasion of Ukraine, the price of Brent crude (the global benchmark for oil prices) has soared above $100 a barrel, and this trend doesn't appear likely to change in the short term.

The mechanism that sets the price of crude oil worldwide is simple and based on the law of supply and demand: oil-producing countries offer a certain number of barrels, depending on projected demand, with the aim of not saturating the market and causing prices to plummet, and oil companies increase their demand in anticipation of a possible crisis. In this context, the International Energy Agency's (IEA) announcement this week to release 400 million barrels of crude oil from strategic reserves should be more than enough to guarantee the global oil supply and prevent an unstoppable price increase. As an example, and to illustrate this decision, approximately 20 million barrels of crude oil passed through the Strait of Hormuz daily last year, far less than the 400 million barrels released by the IEA. So why are diesel and gasoline prices still skyrocketing, with increases of 40% compared to just a few weeks ago?

The major oil companies, which act as intermediaries for this product and control its refining and distribution, have seized the opportunity to increase their profit margins, alluding to a hypothetical scenario of supply shortages. In fact, it is these intermediary companies dedicated to refining and distributing oil that directly benefit from the price increase, more so than the gas station where we stop to fill up, which earns a real profit of between 3 and 5 cents per liter of fuel, regardless of whether the price of oil is higher or lower.

And the government?

The other major beneficiaries of this energy crisis, aside from oil companies, are governments and the relevant administrations. In Spain, the Tax Agency is responsible for monitoring and ensuring compliance with taxes on hydrocarbons and VAT. These two taxes are calculated on the final price, and especially in the case of VAT, the increased final price of the product means that the state collects more revenue. In other words, the Tax Agency is receiving much more money from hydrocarbons now than it was a month ago: for every 10 cents per liter that diesel or gasoline has become more expensive, the state collects an extra 2 cents that it would not have anticipated in its annual planning and projections a month ago.

This reality is particularly striking in the case of diesel, the fuel still used by most cars, vans, and trucks. With diesel priced around €1.85/liter, the State collects approximately 70 cents per liter of fuel, representing an unexpected source of revenue for public finances. In Catalonia, there are about 5.5 million registered passenger vehicles in operation, which on average consume between 20 and 30 liters per week for commuting, taking children to school, or other daily trips. This means that, in the last week alone, the State will have collected approximately (get this!) €95 million in taxes, not including commercial vehicles such as buses, coaches, trucks, or other professional vehicles, which are the main fuel consumers in our country.