Fuels become 20% more expensive in the last month despite the decrease in oil prices

BarcelonaThe famous rocket and feather effect – which states that gasoline rises quickly when oil becomes more expensive, but when oil is cheaper, fuel prices fall very slowly – has occurred again. During the last month, fuel prices in Spain have risen by almost 20%, even though from July 31st until yesterday, the price of oil has fallen by 10%.

According to the EU Petroleum Bulletin, the price of fuels has chained this week the fifth consecutive increase and accumulates an increase of almost 20% since the VAT reduction to 10% fell at the beginning of July, reaching highs not seen since the end of March.

Specifically, the average price per liter of diesel fuel has increased this week by 4.1% compared to the previous one, standing at 1.793 euros. For its part, the average price per liter of gasoline has stood this week at 1.687 euros, after becoming 2.61% more expensive than last week.

With these new increases, the price of diesel has accumulated a price increase of 19.2% since the VAT reduction on July 1st, while gasoline adds a 17.3% increase, so that both fuels are at their highest levels since the week of March 23.

This upturn and change in trend in fuel prices was consolidated after on June 29, the Spanish government, in an extraordinary council of ministers, approved a royal decree-law to address the consequences of the conflict in the Middle East, which included a decrease in VAT on fuels to 10% that had been included in the first package. Despite this, the reduction of the Special Hydrocarbon Tax (IEH) was approved, which meant a reduction of 15 cents/liter in July, 10 cents from August 1, and five cents in September.

This increase in fuel prices also coincides with August, which is one of the periods of the year with the most vehicle travel due to the holiday season, with a total of 54.5 million long-distance trips expected for the entire month across the State, according to estimates from the Directorate-General for Traffic (DGT).

Despite the increase in the last five weeks, the average price of diesel still remains below from 1.883 euros reached the previous week to the entry into force, in March, of the first fiscal measures by the government to contain the impact of the war in Iran on prices.

Fill the tank, between 11 and 20 euros more than a year ago

With this week's prices, filling an average 55-liter diesel tank costs 98.61 euros, about 19.85 euros more than a year ago, when it was around 78.76 euros. For gasoline vehicles, filling an average tank (55 liters) currently costs about 92.78 euros, about 11.05 euros more than a year ago, when it cost 81.73 euros.

Despite the upward trend in recent months since the outbreak of the conflict in Iran, both fuels have always remained far from the peaks they reached in the summer of 2022, in July, when gasoline reached 2.141 euros and diesel 2.1 euros. An increase that occurred then due to the war in Ukraine.

The price of fuels depends on multiple factors, such as specific quotation (independent of oil), crude oil evolution, taxes, raw material and logistics costs, and gross margins. Furthermore, the evolution of crude oil quotation is not directly transferred to fuel prices, but with a time lag.