Petroleum-derived fuels are becoming increasingly expensive
The rising cost of fossil fuels, including oil, is nothing new. In fact, the price of black gold has been on a rollercoaster ride for several decades, fluctuating at the whim of stock market speculation. But it has to be said that the trend is upwards. Between 2000 and 2020, the price of crude oil per barrel almost doubled.
Against this backdrop, the conflict between Russia and Ukraine is only adding to the tensions in a tight market already under pressure from supply and demand.
A dizzying rise in prices in the space of a few weeks
At the beginning of March, a nasty surprise awaited French drivers who came to fill up their tanks. The fuel prices soared above the record threshold of two euros a liter, including at shopping mall service stations with their reputation for low prices.
A few days earlier, the price of a barrel of North Sea Brent crude had reached $110 on the financial markets, a level not seen by traders since 2014. The situation is sufficiently worrying to presage a fourth oil shock, comparable to that of 2008.
Source : Ministry of Ecological Transition
The invasion of Ukraine by Russian troops is being blamed for this inflation. And with good reason: geopolitical upheavals in the main oil-producing countries have a direct influence on the cost of fuel. We need only recall the spikes caused by the 1973 Yom Kippur War or, more recently, by the second Gulf War in 1990.
Price rises induced by armed conflict are therefore not unprecedented. However, it is surprising in its intensity and brutality.
Russia is the world's leading exporter of hydrocarbons. In Europe, crude oil imports from this country account for 26%. In other words, more than a quarter of the oil consumed on the Old Continent comes from Russian pipelines.
Origin of crude oil imported into France
In millions of tonnes
Source : Insee
| Provenance | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2020 (in %) |
|---|---|---|---|---|---|---|---|---|
|
Africa |
19,8 |
20,4 |
16,2 |
15,7 |
17,7 |
16,2 |
10,1 |
30,5 |
|
of which |
|
|
|
|
|
|
|
|
|
Nigeria |
6,1 |
6,7 |
5,8 |
4,8 |
5,8 |
5,9 |
3,2 |
9,6 |
|
Algeria |
3,9 |
4,7 |
4,5 |
4,8 |
5,1 |
5,7 |
3,4 |
10,3 |
|
Libya |
3,1 |
2,1 |
1,5 |
3,7 |
4,7 |
2,6 |
0,9 |
2,7 |
|
USSR / former USSR |
15,1 |
16,1 |
17,0 |
19,6 |
16,8 |
14,3 |
8,7 |
26,2 |
|
of which Russia |
5,4 |
4,7 |
5,8 |
8,9 |
7,6 |
6,2 |
2,9 |
8,7 |
|
Middle East |
12,9 |
14,3 |
14,0 |
14,0 |
12,6 |
10,2 |
5,1 |
15,5 |
|
of which Saudi Arabia |
11,1 |
10,6 |
8,3 |
6,2 |
8,0 |
7,3 |
3,9 |
11,8 |
|
North Sea |
6,5 |
5,7 |
6,6 |
7,0 |
4,1 |
3,7 |
4,3 |
13,0 |
|
Other |
0,7 |
1,7 |
2,3 |
1,4 |
2,0 |
4,3 |
4,9 |
14,8 |
|
Total imports |
54,9 |
58,3 |
56,0 |
57,8 |
53,3 |
48,7 |
33,2 |
100,0 |
|
of which OPEC |
30,9 |
33,2 |
29,4 |
28,6 |
29,3 |
25,3 |
14,0 |
42,2 |
Note: oil is classified here according to the country from which it was extracted.
Reading: in 2020, crude oil imports from Africa will amount to 10.1 million tonnes.
Field: including condensates and other distillation products and non-bio additives.
The restrictive measures deployed by the United States to dissuade Vladimir Putin from persisting with his invasion plans have directly targeted oil imports. Although Europe is still refusing to impose the same sanctions, it is directly impacted by this strategy because of its heavy dependence on the Russian market.
At the same time, to face up to the prospect of the American embargo and anticipate their stocks, importing countries have redirected their sources of supply by turning to other players, such as the Middle East.
This cascade of political decisions had the effect of reshuffling the cards in the fuel supply market. While Russian oil values plummeted, indices for competing markets rose sharply.
Other factors have contributed to the rise in the cost of gasoline and diesel in Europe, such as fluctuating currency indices. The weakening value of the euro against the dollar also played a major role, since the reference price is set according to the US currency.
Despite the freeze on oil production in Russia, a shortage is not yet feared. The other members of OPEC (Organization of the Petroleum Exporting Countries) are planning to increase their production to 400,000 barrels per day. But this pace is unlikely to be enough to offset the Russian deficit.
All the more so as demand has increased with the economic recovery following the Covid pandemic.
Gas prices rise... and so do taxes
Many users have been quick to point out the impact of oil price rises on the taxes levied by the government. In France, as in many European countries, taxes account for almost half the cost of fuel. The taxation of petroleum products is made up of two parts. The domestic consumption tax on energy products (TICPE) is an excise duty. It is calculated in proportion to volume. VAT, on the other hand, is proportional to the market price. Any increase therefore has a direct impact on the amount collected by the State. In this context, it's hard to forget the "yellow vests" mobilization provoked by the carbon tax increase in 2019!
Source : lafinancepourtous.com
For some, all the government needs to do is reduce VAT on fuel. However, this measure would not help businesses and professionals who are already tax-exempt. Not to mention that it would result in an estimated 500 million euros in lost revenue, which would weigh heavily on the government's budget.
Rising prices a source of concern for users
The fact remains that rising gasoline and diesel prices have multiple consequences, both economically and socially. The difficulties that emerge first and foremost concern mobility. According to a survey published by LSA magazine, 35% of French people are considering limiting or modifying their travel for work or leisure.
Another concern is purchasing power, already undermined by inflation and Covid-19. Some households spend 15% of their monthly monthly budget on fuel. But that's not all: in the long term, higher prices at the pump are likely to have collateral effects whose impact has yet to be measured. Many companies will be forced to pass on the extra cost of fuel to their products and services. Ultimately, it is the consumer who will have to absorb these additional costs.
The transport sectors, already weakened by successive confinements, are already severely affected. Fuel is a major expense for airlines. Many of them have opted to reduce their margins in order to maintain their competitive offers. But it's a safe bet that the impact of this new increase will be passed on to airfares.
The situation is equally critical for road hauliers, since fuel accounts for almost a third of their expenses. For these professionals, it's a delicate matter to increase rates at the drop of a hat, especially since invoicing must necessarily be deferred when contracts are annual.
Regardless of their field of activity, companies with a fleet of vehicles are obliged to deal with the additional costs involved. Fleet managers will find it increasingly difficult to rationalize costs... unless they rely on alternative and sustainable energies.
Finally, the conflict between Ukraine and Russia is likely to accelerate the transformation of the automotive sector, which has already been affected by the semiconductor shortage. semiconductor shortage. In the absence of sufficient supplies, production stoppages are multiplying. Some automakers - including France's Renault - have already closed their Moscow plants. This new crisis highlights the need to rethink fragile business models by focusing innovation on sustainable mobility.
Government measures: targeted, temporary assistance
To mitigate the consequences of rising fuel prices, Prime Minister Jean Castex announced on Friday March 11 a resilience plan which will take effect next April.
Drivers will benefit from a reduction of 15 centimes per liter for four months, starting April 1. All petroleum and petroleum-derived fuels are concerned. Prices displayed at service station entrances will remain unchanged. The discount will be applied directly by distributors at the time of payment. They will then be reimbursed by the government.
This massive reduction plan represents a shortfall of 2 billion euros for the State. It is designed to complement the increase in themileage allowance in force since January 25, 2022. As a reminder, the scale had been raised by 10% at the end of January for professionals required to take to the road in the course of their duties. To take advantage of this new allowance, all you have to do is enter the actual deductible expenses field on your tax return.
Although greeted with relief by drivers, the government's financial efforts will only temporarily alleviate a major energy crisis, which highlights a heavy dependence on fuels produced beyond Europe's borders.
The urgent need, therefore, is to step up investment to offset the volatility of fossil fuels. The local production of renewable energies, vectors of green growth, fits perfectly into this approach.
The electric car: between autonomy and savings
Against the backdrop of a new oil crisis, electric drive electric motorization appears to be the big winner. Over and above the savings it brings on an individual scale, it can offer a degree of independence, since it relies on "greener", locally-produced energy.
Compared with 100% internal combustion vehicles, the benefits for users are numerous.
On average, drivers of electric cars can cut their fuel budget by a factor of three. The average cost of a full tank of fuel is no more than 10 euros, compared with almost 40 euros for a combustion-powered vehicle. Of course, you have to add the cost of a subscription to an electricity supplier, but this has little impact on the total bill.
The electric car is also less expensive to run, as maintenance costs are reduced. In particular, drivers can save on oil changes and fuel filter replacements.
The taxation of electrical energy is much more advantageous. The CSPE (contribution to the public electricity service) does not exceed 25% of expenditure (excluding VAT), whereas taxes on oil account for almost 60% of the final price to the user.
To recharge an electric vehicle or a "green" fleet, it is nevertheless necessary to deploy one or more charging stations.
From tax credits have been introduced to facilitate the deployment of such equipment. The MaPrimeRénov' scheme covers the purchase and installation of an electric terminal in a single-family home, up to 75% of the cost. Work must be carried out between January 1, 2021 and December 31, 2023. Assistance is capped at 300 euros per household, with no means-testing. It is open to all French tax residents, whether they own their home, rent it or live in it free of charge.
The ADVENIR provides financial assistance for the installation of charging stations in condominiums. Any homeowner can apply for an individual subsidy, in the form of a 20% contribution to the cost of the work (capped at 600 euros per recharging point, with no bonus) and 5.5% VAT. The only condition is that you must have a private parking space or garage.
For businesses, the scale is between 20% and 50%, depending on whether the parking lot is used by the private or public sector. The maximum subsidy ceiling for the installation of bollards in a parking lot will depend on the power of the bollard.
The culmination of new tensions between Russia and the Western world, the war in Ukraine raises many questions about energy dependency and the volatility of oil markets. But this large-scale conflict also reveals an opportunity to accelerate an energy transition the need for which is no longer in any doubt.
