Drivers around the world are bearing record-high prices for road fuel, as mobility now wins over other expenses in a squeezed household budget, the data show.
Higher prices have yet to cross the pain threshold for drivers in major demand centres. But that could change when US drivers will have to pay more than $6 a gallon and crude prices rise above $140 a barrel, which could happen by the end of the year, analysts say.
Consumers are changing their driving habits, for example, with some choosing not to fill their tanks to capacity, but this has been denting overall fuel demand, the data shows.
Drivers in the EU rarely pay more than EUR 1.60 per liter to fill diesel and petrol cars, and most of the time less than $1.50 based on data from the European Commission in 2005.
Graphic: EU Pump Prices (https://graphics.reuters.com/OIL-PRODUCTS/jnvweznqbvw/chart.png)
Graphic: UK Pump Prices (https://graphics.reuters.com/OIL-PRODUCTS/klpykowxapg/chart.png)
But since Russia’s invasion of Ukraine in late February, EU prices for diesel and petrol have risen more than once with petrol, or gasoline, by more than $2 a liter, with prices firmly at that level. have been recorded.
So far, European drivers seem adamant.
Last week traffic in Rome and London easily eclipsed pre-coronavirus lockdown levels at the same time of year, while drivers in Paris took to the road in similar numbers to 2019, congestion data from navigation data group TomTom showed .
Graphic: London Traffic (https://graphics.reuters.com/GLOBAL-GASOLINE/DIESEL/klvykoawjvg/chart.png)
Graphic: Paris Traffic (https://graphics.reuters.com/GLOBAL-GASOLINE/DIESEL/gkvlgznoopb/chart.png)
Graphic: ROM traffic (https://graphics.reuters.com/GLOBAL-GASOLINE/DIESEL/znpneowwdvl/chart.png)
Madrid traffic congestion has been increasing in recent weeks, but is still below 2019 congestion levels, much like Berlin, TomTom data shows.
Graphic: Madrid Traffic (https://graphics.reuters.com/GLOBAL-GASOLINE/DIESEL/byprjdgyqpe/chart.png)
According to the motoring body RAC Foundation, on 8 June, gasoline prices at British pumps hit a record high of 1.8073 pounds ($2.19) per liter, while diesel broke its own record of 1.8657 pounds.
Adjusted for inflation, it is likely to mark the highest price since records published by the House of Commons Library began more than 100 years ago.
A spokesman for Germany’s filling station association TIV said the demand for the fuel was rising despite the hike in prices.
But he said some driving behaviors were changing. ,[People] Filled a little less and then stopped refueling at €30 ($31.34) or €40 and sometimes more carpools.”
$6 a gallon?
In the United States, gasoline averaged more than $5 per gallon for the first time on Saturday, AAA data showed.
TomTom data shows US drivers in New York and Los Angeles were holding back on trips compared to 2019. But Patrick DeHaan, analyst at GasBuddy.com, which tracks U.S. retail fuel prices, said he hasn’t seen any demand destruction yet.
Graphic: Los Angeles Traffic (https://graphics.reuters.com/GLOBAL-GASOLINE/DIESEL/zdvxoeykqpx/chart.png)
Graphic: Actual Cost of Gasoline (https://graphics.reuters.com/USA-ENERGY/COSTS-GASOLINE/zdvxokwympx/chart.png)
Graphic: New York Traffic (https://graphics.reuters.com/GLOBAL-GASOLINE/DIESEL/dwpkrmglgvm/chart.png)
Asked what price range could lead to a drop in consumption, DeHaan said, “I think it would be $5.50, but certainly $6 (a gallon)”, up from about $5 currently.
Independent analyst Paul Sankey estimated the fall in US gasoline demand to $6 a gallon based on consumer behavior in 2008, when crude prices last hit a major peak.
Graphic: Jakarta Traffic (https://graphics.reuters.com/GLOBAL-GASOLINE/DIESEL/gdpzygrnbvw/chart.png)
Graphic: Tokyo Traffic (https://graphics.reuters.com/GLOBAL-GASOLINE/DIESEL/lbpgnxrwevq/chart.png)
In Asia, traffic in Tokyo, Jakarta and New Delhi is currently above pre-pandemic levels, TomTom data shows.
Chinese retail petrol and diesel prices are currently at record highs. In recent months, strict lockdown measures in major metropolitan areas to contain the spread of the coronavirus have cut oil demand significantly.
In Japan, liberal subsidies have kept current prices below the peak they reached in 2008.
Gasoline demand recovery is still slow as the pandemic has not been completely contained and many consumers are still cautious, a Japanese industry ministry official said on Tuesday, adding that subsidies have not dampened demand.
Indian petrol and diesel prices have cooled after the government increased subsidies late last month. Prices are still below the record levels seen only in May.
Graphic: Actual Cost of Gasoline (https://graphics.reuters.com/USA-ENERGY/COSTS-GASOLINE/zdvxokwympx/chart.png)
However, based on Indian government data, fuel consumption rose 23.8% to 18.27 million tonnes in May from a year ago.
pain threshold
Analysts say crude oil prices have a long way to go before meaningful demand destruction begins to balance the market.
Bank MUFG analyst Ehsan Khuman said, “The slowdown in consumption and replacement remains early.
While benchmark crude oil prices are above $120 a barrel, they are around $20 below the level where Khuman expects price-induced demand destruction.
The CEO of global commodity trader Trafigura said that oil prices may soon reach $150 a barrel this month and go higher this year.
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