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Gasoline, diesel: do our European neighbors pay as much for fuel as in France?

An unprecedented measure.

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Gasoline, diesel: do our European neighbors pay as much for fuel as in France?

An unprecedented measure. To lower prices at the pump, the executive is preparing to authorize distributors to sell their fuels at a loss, “from the beginning of December”, for a period of “six months”. If the government decision has left some commentators skeptical, it says a lot about the concern aroused at the top of the State by the surge in fuel costs. French motorists now have to pay 1.96 cents on average for a liter of SP95 gasoline and 1.88 cents for a liter of diesel, according to weekly data from the European Commission. We have to go back to April 17 - for oil - and February 6 - for diesel - to find such high levels.

However, the French are not the only ones to see their wallets become lighter when leaving gas stations. In all Eurozone countries, a liter of unleaded has jumped by twenty cents on average since the start of the year, going from 1.71 euros to 1.9 euros. Over the same period, the price of diesel increased from 1.77 euros to 1.80 euros. The observation, extended to the whole of the European Union, is even more obvious: the price of SP95 has never risen so high in one year. Today it reaches 1.81 euros on average, compared to 1.66 euros nine months earlier.

If the entire continent is affected by this surge in prices, prices at the pump are particularly high for French motorists... and often more expensive than our European neighbors. SP95 gasoline is cheaper in Spain (1.73 per liter on average), in Belgium (1.86), in Luxembourg (1.64) and even in Germany (1.94). At the Union level, only a few countries are more expensive than France: Denmark (2.05), Finland (1.98), Greece (2), Italy (1.96) and the Netherlands (2.10). Conversely, a handful of countries display unbeatable prices, like Bulgaria (1.42), Poland (1.39) or Romania (1.47). Regarding diesel, France is even worse off, since only the Scandinavian countries (Sweden, Denmark, Finland), the Netherlands and Belgium have higher prices.

To understand these disparities, we must consider the many factors that determine the price at the pump paid by Europeans. “The price at the pump, whatever the country, is defined by five parameters: the price of the barrel, the euro-dollar exchange rate, the refining margin, the distribution margin, and finally, taxes,” explains Philippe Charlez , energy expert for the Sapiens Institute. It is the soaring cost of a barrel of Brent on international markets which explains, in the first place, the surge in prices at European service stations. “Since June, the price of Brent has increased significantly, supported by the very strong demand emanating from South-East Asian countries on the one hand, and, on the other hand, by the voluntary reduction in supply decided by the 'OPEC and Russia'. Earlier this month, Saudi Arabia and Russia announced cuts in oil production until the end of 2023, news that sent crude prices to their highest levels in ten months.

The “refining margin”, which corresponds to the difference between the valuation of refined products and the price of Brent, also worked to the disadvantage of Europeans. Listed in Rotterdam, “refining margins have increased by 35% in recent months, again for reasons of supply and demand,” notes the expert.

These two parameters are common to all countries of the Union. The others, on the other hand, differ depending on the country. This is particularly the case for distribution margins. “They include the transport of fuel to the distribution point and the costs of the fuel pump, which differ depending on the location,” explains Philippe Charlez. But, according to the expert, distributors are not the main responsible for the surge in French prices. “In France, as elsewhere, distribution margins have rather fallen over the last two months, obeying a law which requires that when refining margins increase, the distributor's margin decreases,” reports Philippe Charlez.

Also read: Soaring fuel prices: is the State getting rich “on the backs of the French”?

That leaves the taxes. It is through this lever that States can directly influence the price of fuel at the pump. “Between 36% and 56% of the price charged on fuels in Europe comes from the public authorities: this is the tax burden on fuels,” opines Philippe Charlez. This is deliberately heavy, in order to encourage motorists to change their behavior and obtain more modern, less fuel-consuming and less polluting vehicles. However, fuel taxation is far from uniform across Europe. While France has three taxes on fuels - the TICPE, VAT and the VAT on the TICPE - accounting for 52% of the price of gasoline at the pump (49% for diesel), some countries are more lenient on the with regard to motorists. This is the case for most Eastern European countries (Hungary, Bulgaria, Romania, etc.), whose share of taxes in the invoiced product hardly exceeds 45%. Only a few European countries tax oil more than the French state: this is the case of Italy (55% of the product sold), Greece (55%), the Netherlands (55%) and Finland. (56%). France stands out above all for its high level of taxation on diesel, five points higher than the European average.

Overall, the countries that tax the least are those whose motorists benefit from the best pump rates. There are only a few exceptions worth noting. At an equivalent level of taxation, Belgium enjoys a less advantageous diesel price on average than France (1.9 euros per liter). The paradox is even more striking in Sweden, which taxes diesel at only 36%, but pays much more for it than in France, at 2.15 euros per liter on average. “This can only come from distribution margins, and can therefore be interpreted as a good point for our national network of distributors, undoubtedly more competitive than elsewhere,” believes Philippe Charlez. A national advantage which could further grow once French distributors are authorized to “sell at a loss”, as the government wishes.

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