The Stinking Price of Petrol
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By h.b. - Mar 24, 2008 - 1:05 PM
Petrol prices in Spain continue to rise, despite the falling dollar against the euro

EDITORIAL COMMENT

I am indebted to José Alberto Valverde Mordt, who wrote to the Editor of El País on Sunday for giving me the numbers which I have been wondering about for some time.
Most of us have noticed over the years how the price of petrol and diesel at the pumps increases rapidly in line with the price of a barrel of Brent, but takes far longer to fall in price when the wholesale price falls. It’s an easy way for the petrol companies to make some extra profit, and they have been doing so for years.

It has been suggested in the Spanish press, and this is a good idea, that when the news reports speak of the latest oil price in dollars per barrel they also give the cost in €. Even though we all know that oil is priced in dollars on the international market, we should be told the € cost so we can make a real comparison in price.

That was the point of Sr Valverde’s letter to El País. He notes that in the year 2000 the Dollar was worth 1.2 € and petrol was 60 dollars a barrel – that’s to say 72 € a barrel – Diesel was 65 cents at the pumps at the time.
Now the dollar is worth 65 cents and barrel is 104 dollars – that’s to say 67.60 € - Cheaper in Euro terms now than in the year 2000.
However, as we all know, the price at the pumps has diesel at 1 € 15 cents – 78% more expensive.

Somebody is making a lot of money here, and it’s anyone’s guess what will happen to the pump prices in Spain once the dollar starts to recover in value.

One of the Socialist promises at the last General Election was to establish a new ‘Price Observatory’ to stop such middleman abuses. It’s a welcome move. However it remains to be seen just how effective such a body will be. Let’s hope that one of the first investigations is into the price we are all paying through our noses at the pumps.

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