DRIVERS IN Portugal can expect to be hit hard in the wallet in the next 12 months as more fuel price increases are expected.
The price of petroleum is set to continue its upward trend as crude oil reached new highs on the New York commodities market at US$82.51 a barrel and US$78.49 a barrel in London.
The strengthening of the Euro against the Dollar has contributed towards this increase and consumers in Portugal, completely reliant on imported fuel, are not likely to be spared. “In Portugal, the price of petrol has shot up because the government has been taxing it at a heavy rate, but as regards the relationship in the value of crude and the Dollar-Euro exchange rate, fuel shouldn’t, in theory, go up that much,” says commodities economist José Tavares Moreira. But according to data supplied by the British Petroleum (BP), taxes on fuels are compromising price stability.
“Petrol is, on average, taxed at 62 per cent, while diesel is taxed at between 55 and 56 per cent,” says Fernando Cardoso, Head of Communications and Public Relations at BP in Portugal.
Portugal is at the end of the distribution chain in the European petrol market; in other words, the vast majority of petrol companies only distribute, market and sell fuel in Portugal when they can hike up the prices because Portugal is so peripheral.
The countries producing the crude oil are generally politically insecure and have security issues. Such insecurity increases market speculation. “Those who produce crude oil don’t consume that much and those who consume a lot don’t produce it,” says Fernando Cardoso.
The emerging economies of China and India are also shaking up demand and therefore prices. “Before, everyone used bicycles in those countries but now they are using cars,” he adds.
Luís Pinheiro, a market analyst with Banco Espírito Santo, says that, in the United States, everybody travels by car and this increases demand, particularly in winter.
Crude oil reserves are also falling to 3.87 million barrels – the tenth fall in 11 weeks – according to the US Department of Energy. “There is less oil on the market, stocks are at their lowest for five years,” says Luís Pinheiro, who believes that the increase in prices isn’t good news for the market as it causes inflation in distribution costs and retail prices.
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