Petrol Price, Economy | New hike in pump prices:

– It’s absolutely amazing, says Mats Klomstad.

The 21-year-old stopped to fill up petrol at Kallerud and candidly answered questions from OA’s reporter on how he is dealing with the rising petrol prices again.

– As a student, I struggle to wake up, says Klomstad.

Klomstad, originally from Skarnes, studies cyber security at NTNU Gjøvik. He says he tried to take steps to save money.

– I tried to drive less, but you must have a car. I live two miles from the city center and public transport is very limited. And when the bus is supposed to be in the first place, it’s often delayed if it doesn’t come, he says.

Achievement difference

In the past week, pump prices have again taken a new leap, approaching the peak levels of a few months ago. Nettavisen has recorded diesel prices as high as NOK 27, while petrol prices are slightly lower.

In addition, there is an almost record-breaking difference between the fuels, and unlike what we are used to before, diesel is very expensive.

– Diesel prices are now higher than petrol prices because the purchase price of pre-refined diesel has increased over that of pre-refined petrol. But after a long period of purchase prices, both have increased significantly since the end of September, says Norwegian Circle’s communications manager Knut Hilmer Hansen.

Since the end of September, the price of petrol here at home has risen by NOK 1.40, and the price of diesel has doubled, he confirms.

– It shows up at the pumps after price adjustments, and before price wars drive prices down, Hansen says.

French strikes and mobilizations

It is normal for pump prices to fluctuate during the week. Economics professor Øystein Foros previously told Nettavisen that petrol stations are “unlikely to make a loss” when they reach their lowest level before prices are raised again..

– There are significant fluctuations, and global markets are not to blame for everything, says Helge Andre Martinsson, oil and gas analyst at TNP Markets.

But the fact that diesel is now significantly more expensive than petrol has international implications, confirms Martinson. He points out several reasons for this:

– We have the situation around Russia, which is an important exporter of oil products like diesel. In addition, a refinery strike is underway in France, which is putting pressure on the markets. Distillate stocks used to make diesel are now at very low levels.

The strike has hit six of seven French refineries hard, AFP news agency reported, reporting worsening conditions after fuel shortages and hoardings among motorists.

Gas prices, now three times the price of oil, ensure that in many places using diesel generators is more profitable than getting power from gas, an alternative, Martinsen says.

Thus, an indirect effect of rising gas prices is increased demand for diesel.

Biden, Saudi Arabia and oil

About a week ago, OPEC+, a group of oil-producing countries that includes Saudi Arabia and Russia, decided to cut oil production by 2 million barrels per day.

The decision has sparked outrage in Washington DC and a serious confrontation between the Biden administration and Saudi Arabia, usually a staunch US ally in the Middle East. Increased pressure on pump prices in the U.S. could be enough for Democrats to lose the midterm elections for Congress in early November.

In addition, the conflict creates new price pressure in the oil market, and also contributes to raising pump prices in this country:

– Martinsen explains that the conflict with Opec+ is contributing to higher oil prices, but it is not so important for the difference between diesel and oil.

Expectations of cuts from Opec+ have lifted oil prices to $94 from $84. An oil analyst explains the effect as follows:

– A rule of thumb is that when the price of oil rises by 10 dollars, the price of petrol increases by 70 øre per liter.

– It will happen again

In other words, gas prices, Russia’s war and production cuts both affect pump prices. But we get a scenario with fluctuations and big local differences everywhere at the top and bottom of the market:

– It is true that both petrol and diesel are under NOK 20 at the pump in many places, recently around NOK 22, says K circle Knut Hilmar Hansen.

Price wars occur in local markets with strong competition, he asserts.

– This is not the first time that diesel is more expensive than petrol. It has happened before and it will happen again. We must remember that these are two different products that are produced differently in refineries.