Why is diesel cheaper than gasoline? An expert deciphers the situation

Why is diesel cheaper than gasoline? An expert deciphers the situation
Why is diesel cheaper than gasoline? An expert deciphers the situation

The decline in diesel registrations is being felt (less than one registration in ten in France): demand is less strong for diesel.

This is one of the causes which explains the drop in prices for motorists driving on diesel.

Eric Layly, national president of the French Federation of Fuels, Fuels and Heating, deciphers the situation.

Do diesel and unleaded prices depend on the same factors?

On the one hand, there is the price of crude oil which will affect the base price of fuel. As of December 15, Brent was at its lowest: $75 per barrel. It went up to $90 not long ago. We have seen a drop in recent days where it is at 83 dollars. This trend influences prices. But we must keep in mind that international quotations, here European, are not the same for unleaded and diesel. We note that in January, the quotation for unleaded fuel was cheaper than diesel: 55 cents per liter, compared to 60 cents, excluding taxes. On the latest figures available to us, for the end of April, we see a strong rise in this quotation for unleaded: 68 cents compared to 63 for diesel.

What is this fluctuation due to?

It’s linked to demand. The phenomenon of a decline in diesel car registrations and an increase in hybrid cars is starting to be felt. In France, in February 2024, over twelve rolling months, we see that the consumption of unleaded 95 increased by +7.9% while the consumption of diesel fell by 4.6%. We see, here, the effect of transformation of the vehicle fleet.

What about taxes?

The domestic consumption tax on energy products (TICPE) is higher on gasoline than on diesel. Today, excluding VAT, it amounts to 60 cents on diesel and 67 cents on gasoline. So, even if the international quotations were the same for the two products, gasoline would cost 7 cents more excluding VAT, so 10 cents more in the end.

Can the TICPE increase for diesel?

The government had a plan on this subject: taxes on diesel were to gradually increase each year to be at the same level as unleaded. This is what triggered the Yellow Vest movement. Emmanuel Macron has committed not to touch this tax until the end of his mandate, the situation is frozen.

So this price gap is here to stay?

There was a whole period, from September 2023 to March 2024, where unleaded fuel cost less than diesel.

So this can happen again?

It is very difficult to predict, obviously. But, yes, technically it can happen, the curves intersect.

Could this period lead to a surge towards diesel?

It’s a possibility. Not everyone is pro-electric, this can be an argument for some people. We also see that registrations also depend on aid.

Pump aids: are they over?

Total is the only one to have committed to capping at 1.99 euros in 2024. Given the savings presented by the executive, I do not think that new government aid could be relevant again. But if prices exceed 2 euros per liter again, large retailers would once again be encouraged to charge the liter at cost price as has been done in the past.



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