While inflation in Austria remains at around 11 percent, the opposite trend is already visible in Germany. One reason for this is fuel costs, which have returned to normal after about a year. This alone is likely to slow inflation significantly in the coming months.
While prices at the gas stations are still expensive in a long-term comparison, they almost seem like a bargain compared to the values of a year ago. In March 2022, all previous fuel price records were shattered under the influence of the war in Ukraine.
Diesel for 2,321 euros at a record high
According to figures from the ADAC, on March 7 last year, the value of 2 euros per liter of Super E10 and diesel was exceeded for the first time in Germany on a daily average. The all-time high for diesel followed on March 10 with a daily average of €2,321 per liter in Germany. The E10 record was reached on March 14 with 2,203 euros.
Prices down half a percentage point
Prices are currently far below that. In February, both premium petrol of the E10 variant and diesel cost 1,754 euros per liter on a monthly average across Germany, as determined by the ADAC. If prices were comparable in March, diesel would be about 18 percent cheaper and premium petrol about 15 percent cheaper than in the same month last year. That would be so obvious that it would even be reflected in inflation.
After the recently introduced new weighting of the consumer price index, in which fuel prices account for approximately 3 percent, there is a calculated dampening effect of almost half a percentage point.
More discounts coming soon
“Unlike in parts of last year, fuel prices are again more closely linked to oil prices,” says ADAC fuel market expert Jürgen Albrecht. “I don’t think it’s very likely to go up. If competitive forces kick in and nothing out of the ordinary happens, fuel could become even cheaper in the coming months.”
Albrecht sees room for improvement, especially in the field of diesel. Because the excise duty on fuel is significantly lower than on petrol, diesel is usually significantly cheaper. On average, from 2012 to 2021, diesel was a whopping 15 cents cheaper than E10 – not just 2.1 cents like on Sundays. And with the end of the heating period there is another effect: if the demand for heating oil falls in the spring, this often also depresses the price of diesel.
“Companies do not give up margins voluntarily”
However, price reductions should be enforced through competition, Albrecht emphasizes and pleads for deliberately cheap fuel. “The mineral oil companies will not voluntarily give up their margins.” Another factor is that consumers are now somewhat accustomed to high prices.
A year and a half ago, the fuel prices currently seen as normalization would have been clear highs. It is difficult to predict how fuel prices will develop in the second half of the year. It should primarily depend on the price of oil – as in the past.
High prices have not reduced consumption
Despite the high prices, no less fuel will be consumed in 2022 than in previous years. The annual figures for fuel deliveries recently reported by the German Federal Office for Economy and Export Control (BAFA) even show an increase for petrol compared to the pandemic years 2020 and 2021. The level for diesel is largely unchanged.
With petrol in particular, the effects of the easing of the corona virus and increased travel seem to have more than offset the effects of the high prices. For Corona, however, the consumption of both fuels was significantly higher.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
