Fill up: Crude oil is cheaper, fuel is at a record level – the government must take responsibility

DrBundeskartellamt warns the energy industry to keep fuel prices arbitrarily high, despite crude oil prices falling again. “If crude oil prices are now falling again and gas station prices are not tracking or even continuing to rise, you should take a closer look at it,” said President Andreas Mundt. This included several levels of the market: from the crude oil market to refineries and wholesalers to gas station operators.

“My home has asked the Federal Cartel office to closely monitor gasoline and diesel prices and take action if there is any indication of abusive behaviour,” said Economy Minister Robert Habeck (Greens). The oligopolistic situation in the German fuel market has been a structural problem for a long time.

“It should not be the case that companies are making inappropriate profits from the current situation,” Habek said. “If there are indications of this, for example when comparing price movements in other EU countries, we will prepare legislative measures to enable the Federal Cartel Office to better monitor the fuel market.”

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In the past few days there has been much criticism of mineral oil companies because fuel prices at filling stations have remained at a very high level despite the drop in oil prices. Baden-Württemberg’s Finance Minister Daniel Bayaz (the Greens) summed up the discontent on the Twitter SMS: “My impression is that a few multinational oil companies are doing a big deal.”

“Somewhere between oil production and a gas station, money is stuck”

While crude oil is again approaching the price level before the start of the Ukraine war, premium gasoline remains 40 cents a liter more expensive, and diesel even 60 cents. Normally, oil and gas prices move relatively synchronously, but at the moment they are largely separate.

On Wednesday morning, the price of a barrel of North Sea Brent (159 liters) was just under $103. After Russia’s attack on Ukraine, they rallied tremendously, reaching their highest level since 2008. The price of a barrel of Brent is now $139. Russia is one of the largest producing countries in the world.

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The Abu Dhabi Airports Company also complained about the discrepancy between the prices of crude oil and gasoline, which was observed days ago. “Despite all the special effects of the war and the explanations for higher fuel prices, the extra driver money is stuck somewhere between oil production and gas stations,” said fuel market expert Jürgen Albrecht of German news agency DPA. “The mineral oil companies are currently making really good profits in the refinery business.”

Missing price movements at petrol pumps are not only explosive because they cause a lot of trouble to drivers. By its behavior in the past few days, the government has probably contributed to the fact that the prices at the pumps are not dropping significantly at the moment.

Finance Minister Christian Lindner (FDP) has proposed a tank discount that would give customers at gas stations a rebate of 30-40 cents per liter, which the state would then compensate for. Therefore mineral oil companies do not care much about reducing prices before setting such a discount, because the political pressure to introduce such a measure will also decrease.

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It is said in government circles that the debate about the right actions against higher energy prices was “really stupid” when Lindner announced the proposal. Now a new bidding competition emerges for the relief of the respective agents of the ruling parties. In addition, the measures of the first relief package that have already been identified, such as the early cancellation of the EEG surcharge, can have no effect now.

However, there are also other theories about the unchanged high fuel prices. Justus Haucap, a professor at the University of Düsseldorf and a former chair of the Monopolies Committee, sees refineries as drivers of prices. “With their pricing policy, they can expect an expected oil embargo on Russia by deliberately cutting supplies,” Huckab says.

A ‘certain abuse of market power’ cannot be ruled out in light of the increase in profit margins at this point. Refineries on the market are tightly intertwined.

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The sale of only petrol and diesel accounts for the largest share of sales at gas stations.  However, the profit is hardly made through fuel

Gas stations in the electronic age

Haucap rules out the possibility that gas station renters will benefit excessively from higher fuel prices. “The competition between street filling stations is very high for that,” he says. The past few days have shown that price cycles are virtually unchanged throughout the day and gas station behavior is unchanged. It’s still cheaper in the early evening than in the morning.

According to Klaus Holthof-Frank, Secretary General of the Monopolies Committee, antitrust action will take months. “Formal action is needed for abuse, market power must be established, and then there must be proven to be absolutely abusive pricing,” he said. Holthof-Frank recalls an investigation by the Federal Cartel Office a few years ago, which found that mineral oil companies had uniform pricing behavior, but there was no knowledge of price fixing.

The Consortium of Mineral Oil Companies in Fuel and Energy (En2x) sees why prices continue to rise at petrol pumps in the lack of petrol and diesel as a result of the Ukraine war. Companies are already trying to reduce imports of diesel and crude oil from Russia. As a result, the price of gasoline and diesel has largely “decoupled” from the crude oil market. How prices will continue to develop depends only on the situation in Ukraine.

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