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ARCHIVED - Fuel prices in Spain reach all-time high yet again
The cost of petrol and diesel in Spain has risen 10% and 15% respectively in a week
Fuel prices continue to rise on a weekly basis in Spain with experts warning the hike in petrol and diesel costs is likely to continue throughout the year.
Despite a sharp drop in crude oil prices – down 40% since March 8 – it has done nothing to drive down the inflated fuel prices for the moment, with the cost of petrol and diesel in Spain rising 10% and 15% respectively in the last week, once again surpassing record highs.
This has many wondering why consumer prices are so quick to go up but only go down again at an incredibly slow rate. This is the so-called ‘rocket and feather’ effect in economics, which states that costs are passed on to the end consumer immediately when prices go up, but a lack of competitiveness between retailers to lower prices means that end customers don’t feel the benefits straightaway even when the wholesale cost decreases. Thus, even though the barrel price of oil has dropped, it will be some time before petrol and diesel on the forecourts follow suit.
According to data released on Thursday March 17 by the European Union Oil Bulletin, the average price recorded at more than 11,400 Spanish service stations between March 8 and 14 rose to an average of 1.844 euros per litre for petrol, and 1.817 euros for diesel.
Up to now, tensions over supply have generated the eleventh consecutive price hike for both fuels, and petrol is currently 21% above its record price, set nine years and surpassed at the end of January. Diesel is 25.7% higher than its previous peak, also in 2012, and these prices have led to panic buying and threats of service station closures.
It also means that filling an average 55-litre tank now costs 101 euros in the case of petrol and 100 euros in the case of diesel, costs that have triggered protests by hauliers.
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The price of the raw material, crude oil, represents only 34 euros of the 100 euros spent filling up, according to the Spanish Association of Oil Product Operators (AOP), whilst nine euros covers the cost of logistics and marketing, and one euro is the gross wholesale margin.
In stark contrast, a whopping 46 of the 100 euros is swallowed up in taxes.
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