ECONOMIC COMMENT: Gasoline price cuts have stopped after five weeks. Why when the price of oil falls?


CR – The average price of gasoline in the CR, after the previous five weeks of decline, stopped decreasing in the past seven days. Just like a week earlier, gasoline was sold nationwide for an average of 38.85 kroner per liter yesterday. Diesel then became cheaper by ten halers per liter, to 39.31 crowns per liter.

In the next five days, the discounting of fuel should be more significant, in the range of around 50 pennies per liter. For example, the crown price of a ton of wholesale diesel on the commodity exchange in Rotterdam now corresponds to the level of 19,300 crowns. The last time it cost that much, at the end of July this year, diesel was sold in the Czech Republic for only about 33 crowns per liter. Even if we take into account the increase in the consumption tax on diesel, which took place on August 1, which after including VAT raised the price of diesel by CZK 1.80/l, there is still significant room for a gradual discount of diesel (and also gasoline), up to the extent of a few crowns per liter.

The reason for the drop in Brent crude oil prices, which fell below $80 per barrel yesterday for the first time since July, is weaker economic data from China, which is the world’s largest oil importer. Oil traders are worried about weaker demand for the raw material. At the same time, their fears about the expansion of the conflict between Israel and Hamas are decreasing.

The markets originally calculated on a more vigorous retaliation by Israel, in the form of a large-scale ground invasion of Gaza, which has not yet taken place. This helps to reduce the price of fuel in the Czech Republic. And this despite the fact that the koruna still remains relatively weak against the dollar.

Oil and petroleum fuels may now become more expensive if the Middle East conflict between the Palestinian Hamas and Israel widens to potentially include Iran, the world’s key oil producer and exporter, as well as the United States. Israel itself does not produce much oil, but the involvement of Iran would significantly increase oil prices. Tehran’s involvement could lead to a response from the United States, which increased its military presence in the Middle East in October. So far, apparently mainly for the purpose of deterrence. It is possible that this deterrence had an effect, but again it helps to keep the price around 80 dollars per barrel, so thanks to this they continue to make fuel cheaper in the Czech Republic.

The article is in Czech

Tags: ECONOMIC COMMENT Gasoline price cuts stopped weeks price oil falls


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