Fuel prices go sky high in Europe

The fulminate rhythm of the price increase for power in the euro zone, but also in Romania nourishes the increase of inflation.

During the last six months, the main concern of the Europeans has become the constant increase of prices. For 37% of them the increase of the inflation rate is a nightmare, substantially outrunning the unemployment spectre, of which fear only 26%. The Romanians are even more frightened then the average, almost half of them considering that their major problem is represented by the high prices for power and food. Unfortunately there isn’t positive news, and starting with this autumn the announced rises in price during the summer for natural gas, fuel and power will be noticed not just in the prices for food and transport – as it happens now, but also in the substantial invoices for utilities and power. The price for power is the main factor of the inflation expansion, outrunning as importance the food rise in price. The European Central Bank puts the inflation of 4%, recorded at the end of June in the euro zone, firstly in the account of the rise in price for gasoline, diesel and natural gas. The annually increase of the harmonized index of consumer prices was of 3,7% in May, against 3,3% in April. The price fast approaching is even more visible if it is compared the increase from May with the one from December 2007, of 2,1%. The world evolution of the unrefined oil market has decisively influenced the rise in price which the Europeans feel, and the price for the natural gas has the tendency of doubling it as trend.

During the last six months, in most of the European Union member states, the rise in price for the auto diesel has outrun as dynamic the one of gas, and even the one of unrefined oil, contributing in a great measure at the record burst of inflation from the euro zone. So, in countries such as Romania, Bulgaria, the Czech Republic, Spain, Hungary, Ireland, Latvia, Lithuania, Austria, Poland, Slovakia, Slovenia, Sweden and Great Britain, the differences of prices between the gas of 95 and diesel have become more and more visible in the first half of the year, reaching to an ecarte of up to 200 de euro/1000 liters at pump. Only for Belgians, French, Italians, Luxembourgish, Dutch and Portuguese buying the cars on diesel can also mean a saving in the personal budget, in their countries the gasoline continuing to be more expensive.

As in what concerns the future evolution of the prices for gas and diesel, the European Central Bank forecasts the maintenance and even the increase of difference in price in the disadvantage of the possessors of transportation cars filled up with diesel, as in the European Union, as on world plan. According to the ECB Bulletin on July, the reason is given by the demand for diesel which maintains at high quotes, because of the increase of the auto park on diesel, as also because this is the main fuel used in the road transportation of all types.

This demand is so high, that the pressure exerted on the offer proved to be over the supply capacity of the European refineries and needed more imports from the extracommunitary space. Only in June there were needed over 900 thousands tons of diesel, in order to cover the market demand. Assuring the necessary of consumption from import it is practiced on large scale in the European Union, increasing the power dependence of the member states against the countries which supply unrefined oil, gasoline and diesel, with negative consequences in economical and political plan. Next to the demand over the capacity of production of the refineries from the comunitary space, another factor strongly pressures in the direction of increasing the diesel price in a more alert rhythm then the one for gasoline. It’s about quality, respective the reduced content of sulphur of the sold diesel in the European oil stations. The additional costs needed for obtaining the quality diesel are added to the price for final consumer.

For Romania, the National Bank considers the acceleration of the price increase for power as being a major factor in setting up the inflationary pressures, after the model of the euro zone countries. In the latest report on inflation, BNR appreciated that in the second quarter, for the second time consecutivly in 2008, the annual dynamic of the volatile prices (increase of 4,7% against December 2007) was impelled by touching some new historical maximum for the price of crude oil on the world market. These have materialized in rising in price of the fuels on the domestic market, whose monthly average variation was of 1,4%. It is also added the inflationary pressures of the prices for utilities, the natural gas recording the most important increase of tariffs 8,42%.
The negative effect of these phenomena, hard to be controlled through the national politics, it is also felt in the standard of living of Romanians and competitiveness for the local companies on world markets, as also on the objective of adopting the euro currency. To the risk of the excessive budgetary deficit, announced it last week by the Minister of Economy and Finance, Varujan Vosganian, is added the increase of the gap of the annually average rate of the inflation against EU27. This difference was in March, c.y, of 3,2%, against 2,5 percentage points at the end of 2007. In the same time, the ecart against the average of the inflation rate of the most performing three member states of the European Union was of 4,2% at the beginning of the second quarter of the current year, having the perspective of maintaining a similar evolution also in future. According to the criteria of nominal convergence of adhesion to the euro zone, this difference should be of maximum 1,5 percentage points.