Fuels: why pump prices have not fallen... and could even rise again

After soaring last summer, oil prices have started to fall again. Enough to give hope to motorists, who hoped to see the bill decrease with each fill-up. In vain. Worse, on Sunday, Saudi Arabia, OPEC heavyweight, decided to reduce its production in an attempt to raise prices. However, in France, prices at the pump did not wait for this decision to rise. For the past fortnight the trend has even been slightly bullish. Between mid-May and the end of the month, diesel gained 2 cents on average at the pump and unleaded 95 and 3 cents, to settle respectively, 1.67 euros and 1.88 euros per liter, according to the professional union of energy suppliers, Ufip Energies and Mobility. In other words, they are much higher at the beginning of June than in September, when there is a lot of pressure on raw materials. Ufip then recorded an average price of €1.65 per litre for diesel and €1.88 for SP 95.

What happened? In April, the consumer association CLCV estimated that gasoline and diesel prices were on average 10 cents too high per litre, due to too high margins levied by distributors. The Minister of Energy Transition Agnès Pannier-Runacher was in turn up to the niche. The blow was successful, since prices had fallen in the aftermath, from 1.961 euros per liter for the SP on April 14 to 1.87 euros on average, in three weeks. But the decline stopped there.

The end of rebates

Why don't the French benefit from a bigger drop? To understand you have to go back a year. As fuel prices soared, the government came to the rescue of motorists, with the implementation of a pump discount of 30 cents per liter, on September 1, 2022. TotalEnergies had also put its hand to the relative, adding an additional discount of 20 cents. Enough to cushion the soaring prices. On November 1, these two discounts had been reduced to 10 cents each, before disappearing on January 1.

In other words, in September diesel was displayed at 1.65 euros, when it should have cost 2.15 euros, without discount. The upside shock absorber has therefore worked perfectly, with one consequence today: motorists do not benefit from the decrease. From a price kept artificially low, we returned to a price reflecting the reality of the market. This is the double effect of the shock absorber. Prices are rising less. But they fall less when the time comes. It remains to be seen whether Saudi Arabia's announcement will actually raise prices, and in what proportion.