With oil in the $100, what will happen to fuel? There are already clues

O brent oil barrel is over $100 per barrel, at the latest in May, but the fact is that provisional forecasts do not anticipate a strong rise in fuel prices at the beginning of next week – at least for now, but anything can change. 

Source of the sector advanced to News to Minutes, which estimates point to a a slight increase in the price of diesel and for a reduction in petrol, but it is necessary to wait for more data to “close” the accounts.

Official forecasts for variations in gas oil and petrol prices will be released on Friday afternoon. 

At this point, remember, the price of simple diesel is at 2,112 euros per litre, while simple petrol 95 is costing 2,100 euros per litre, according to the average prices updated by the Directorate-General for Energy and Geology (DGEG). 

These average values, refer to “are calculated on the basis of the prices reported by the fuel stations, weighted by the quantities sold in the last known period, incorporating the discounts charged at the supply stations as fleet and other cards”.

Setting fuel prices is “last case”

The Minister for Environment and Energy defended on wednesday that the fixing of fuel prices should only be used in the last case, arguing that the market should operate and the State should act through taxes and subsidies.

“To set prices is a measure that is only done in the last case, because the State pays, we must let the market work,” said Maria da Graça Carvalho, at a hearing in the Committee on Environment and Energy.

The governor said she was not in favour of direct price intervention and advocated tax measures and support for consumers and more vulnerable sectors.

“I am not an apologist of moving in the market, one should let the market work and then act on taxes and support for the most vulnerable,” he said.

Maria da Graça Carvalho evoked previous experiences to justify this position, referring to a decision limiting fuel prices during a government led by António Guterres.

According to the minister, former minister Joaquim Pina Moura later acknowledged that this intervention had been a bad decision.

“There is evidence, just yesterday I read some statements from former Minister Pina Moura, in the time of the Engineer Guterres, in which they limited fuel prices and he himself says it was the worst measure he took during his life, because interfering in the market always has bad consequences,” he said.

The minister also pointed out the Iberian gas price limitation mechanism adopted during the energy crisis, as an example of the risks of interference in the functioning of the market.

“ The interference in the Iberian gas brake market [...] had very serious consequences, particularly for Spain, but also for Portugal”, he said.

Maria da Graça Carvalho added that, in her assessment, the investment in wind energy fell after the application of that mechanism.

The governor also reiterated that the executive’s strategy to respond to the rise in fuel is to ease the tax burden and concentrate support on the most vulnerable sectors, rather than administratively setting prices.

The rise in fuel prices occurs in a context of increased tensions in the Middle East, to which the Minister added the effects of the war between Russia and Ukraine on refining capacity and energy supply.

The minister warned that the destruction or reduction of the capacity of various refineries, as has happened, may cause market standardisation to take time even after the end of the conflict, as these infrastructures take years to rebuild.