Lower oil prices? Not for Europe’s gasoline consumers

By: | Published: July 17, 2015 8:27 PM

Crude oil prices may be falling, but things are not so rosy for European gasoline consumers.

Crude oil prices may be falling, but things are not so rosy for European gasoline consumers.

Gasoline pump prices in the 28-member European Union hit their highest since early November this week, according to the EU’s statistics office.

Benchmark Brent crude oil, on the other hand, dropped more than 30 percent over the same eight-month period to around $57 a barrel.

Behind the divergence are robust global demand for gasoline and a stronger dollar, which makes dollar-priced commodities like oil more expensive for buyers using other currencies, said analyst Oliver Jakob at Swiss-based Petromatrix.

“The price for the consumer in Europe looks very different than if you look at the Brent price in dollars,” Jakob said.

By contrast, average diesel pump prices in Europe were this week at their lowest since March 30, according to Eurostat.

Unlike gasoline, diesel supplies have risen steadily in recent months as huge refineries in the Middle East, Asia and the United States increase their output while demand has remained relatively stable.

The drop in oil prices over the past year sparked strong demand for gasoline across the world from China’s rapidly expanding middle class to the United States, where consumers are driving more and buying bigger cars.

This demand has also offered Europe’s embattled refiners a rarely seen run of profits as dozens of tankers filled with gasoline and blending components leave Europe for Asia, the Middle East, Africa and the Americas monthly.

Gasoline prices could ease as the summer holiday season, in which demand historically peaks, draws to an end.

“We are in the gasoline season and for now the gasoline crack is still strong,” Jakob said, referring to the profit made from processing crude oil into refined products.

“As you fade out of the gasoline season, you should lose some of the premium.”

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