Gas stations warn that fuel could exceed 3 euros this summer

by time news

Patxi Fernández

Madrid

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Fuel prices in Spain remain unstoppable. Both gasoline 95 and diesel have prices in most service stations above two euros per liter. And the escalation seems unstoppable, as predicted by the president of the Spanish Confederation of Service Station Employers (CEEES), Nacho Rabadán, who anticipates that this summer he could overcome the psychological barrier of three euros per liter.

“I do not rule out any scenario, we could see prices of 3 euros/liter this summer,” confesses Rabadán, who explains that refineries have maximized their diesel production because demand far exceeds supply and their refining margin when processing diesel it is very high. The problem is aggravated because now summer is coming in the northern hemisphere “and with it an increase in the demand for gasoline and there is not enough.”

This means, in practice, that filling the tank of a car with a capacity of 55 liters will cost about 165 euros «so for a vehicle with a consumption of 7 liters per 100, traveling 20,000 km a year will cost about 4,200 euros, 350 euros per month.

All service stations in the hands of SMEs (69.5% of the 11,650 service stations registered by the Ministry of Ecological Transition and Demographic Challenge) face an extremely difficult situation due to high prices. The decrease in demand and the application of the 20-cent bonus implemented by the Administration are two of the causes that have pushed these establishments against the ropes. Compared to 2019, 492 companies in the sector have disappeared and 1,516 jobs have been destroyed, according to figures from the Spanish Confederation of Employers of Service Stations CEEES.

Its president, Nacho Rabadán, explains that closures are not usually due to a single reason, but rather a series of cumulative circumstances that ultimately result in the closure of the business. “We think that the situation of the sector is far from being ideal. During the first months of the pandemic, we were forced to remain open with the same hours that we had, despite the fact that mobility fell by 90%. In fact, some associates had problems closing the shifts because the computer system detected that an error was occurring as they had registered 0 euros of sales during the shift. That’s where we come from and the passage of time has only aggravated the already complicated situation of service stations.

For consumers, it does not stop seeming a contradictory situation, since with prices breaking records week after week, it is contradictory that the service stations are suffering a deep crisis. Part of the blame lies with the bonus of 20 cents per liter established by the government, which although it serves to relatively contain the escalation of prices for the consumer, is causing the suffocation of the businessmen of the service stations.

According to the latest data offered by the Ministry of Finance, the Administration has already paid 333.6 million euros in refunds of the bonuses applied, which corresponds to just over 84% of the applications submitted. In other words, 16% of the requests have not been answered. And the worst thing is, according to Rabadán, that according to the literal wording of Royal Decree Rd-L 6/2022 that regulates this measure «the Administration would be within the deadline even if it paid us on June 15 the bonuses made in April and until July 15 to return the amounts advanced throughout the month of May ». Since the refunds depend on the special delegations of Special Taxes of the Tax Agency, there are some territories in which “requests are being dealt with much more quickly than in others, causing inequalities and competitive disadvantages between service stations based on the autonomous community in which they are located.

The measure has caused a “book” financial strangulation to the thousands of SMEs that make up the sector. Some are managing, according to data from CEEES, to stay afloat “thanks to the lines of credit they have signed with their respective financial institutions.” Others have adhered to the agreement signed between this business association and EBN Banco. In any case, they are having to face financial costs “which they would not have had if the measure had not come into force.”

Nacho Rabadán explains that suppliers are aware of the liquidity problems that service stations face and, in some cases, are asking for advance payment for tankers when supplying us with fuel. “When liquidity problems start it is like when a domino falls, they usually never come alone and they go in a chain. And having to advance 1,000 euros per day (33,000 euros per month) on average drains the liquidity of any SME, regardless of the sector in which it operates.

At the same time, the OCU Consumer Organization has denounced that the reduction of 20 cents per liter of fuel has not managed to stop the continuous evolution of prices, for which they advocate the need to take more drastic measures, such as the temporary abolition of taxes.

Why are fuel prices rising?

One of the most frequent doubts among consumers is why the price of fuel does not vary in the same proportion as the price of Brent crude. As explained by the Spanish Association of Operators of Petroleum Products AOP, the price in Spain is not directly related to the price of a barrel of oil.

The final price depends on the prices of gasoline and diesel in the reference wholesale markets (Mediterranean and Northern Europe in the Spanish case). Since these markets are traded in dollars, the euro/dollar exchange rate is also a significant factor.

There are expenses that practically do not vary, including production, distribution and marketing costs, which include wholesaler and retailer margins.

The price is also affected by taxes and other associated costs, such as the maintenance of strategic reserves and the contribution to the National Energy Efficiency Fund.

In Spain, liquid fuels derived from petroleum are taxed with two taxes: VAT of 21%, and the Special Tax on Hydrocarbons (IEH). in this case, the general State Tax Rate (TEG) for gasoline 95 is €400.69/1,000 liters, and €307/1,000 liters for diesel A. With the Special State Tax Rate (TEE) the State collects An additional 72 euros for every 1,000 liters of gasoline 95 and diesel A (March 2022 figures provided by AOPP).

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