Reasonable Perspective on the Perception of Gasoline Being Inexpensive Among Many Individuals
Revamped Reduction of Fuel's Cost Complexities
So here's the deal: On our website, you'll find cheap gas prices - the lowest they've been in a while. But is it true that fuel is cheaper than it was 5 or 10 years ago? That's a tricky question, my friend. It's all about perspective and what we're used to!
Let's crunch some numbers:
Numerical Natter
As of this past May, the typical German filled up their gas tank with Super E10, setting them back an average of 1.68 euros per liter, according to data from the ADAC, while diesel came with a slightly less painful 1.56 euros per liter. Compared to 2024's averages and even more so to the years 2023 and especially 2022, when both fuels cost over two euros per liter, it's fair to call these prices a relief!
But let's look back to 2020, when the price of a liter of diesel dipped below one euro, marking fuel prices that were more than 40 cents cheaper than today. Prices like those currently at the pumps would have been uncomfortably close to or even surpassing the record highs from the autumn of 2021, with the decade from 2010 to 2019 seeing an average fuel cost that was over 20 cents cheaper than it is now.
Is comparing apples to oranges fair, though? Well, yeah and no - it ignores inflation. Over time, vehicles, bread, and even meals at restaurants have become more expensive than in the past decade, too. So, if we account for inflation, the picture changes, and the current fuel prices tumble into the middle of the road: According to this calculation, diesel prices have been higher in 12 out of the last 25 years, and gas in 18.
The Whys and Wherefores of Fuel's Fluctuating Prices
To comprehend why fuel prices, unlike many other goods, swing wildly and sometimes even drop, we need to investigate their composition. There are three main components: oil price, taxes and fees, and processing and distribution.
Oil price is responsible for those peaks and dips, as it has ranged from more than 100 euros to less than 40 euros per barrel (159 liters) in the past five years. However, figuring out the exact oil price per liter of fuel is tricky due to the myriad different products made from oil. Using volume as a rough estimate, the current oil price gives us values around 36 cents.
Government which means taxes and fees, make up the largest share, with around 105 cents for gas and 86 cents for diesel. More than half of this is the evergreen energy tax, which has remained constant since 2003 except for the fuel price brake period in 2022. Value-added tax plays a minor role in price development, and the CO2 tax has only been relevant for a few years, currently accounting for 13 cents for petrol and just under 15 cents for diesel.
The remainder is for processing, distribution, and profits of mineral oil companies. Although no clear figures are available, it's reasonable to expect that their costs will increase just like the expenses of wages, energy, transport, and other such things. However, this share is smaller compared to the taxes and fees.
"I wouldn't call the price of fuel on our website cheap," muses Christian Laberer, an expert on the fuel market at the ADAC. "Currently, we're heading towards 2025 being the fourth most expensive year for filling up, if not more, when we take inflation into account. There's still room for prices to drop, especially in the wholesale margins and at refineries. But the disruptions caused by the Ukraine War have left a significant amount of money stuck there."
But why does the price still feel cheap to some people?
Laberer attributes this to people growing accustomed to the prices. In times of much higher prices, he had warned about this. Some folks view the current prices as relatively cheap "because we've seen much more dramatic prices not too long ago," Laberer surmises. "Over time, people get used to the new levels and are almost relieved when it's only 1.70 per liter instead of two. It's like going from the cold into a cool room: That also feels warm in comparison."
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In the constantly evolving business landscape of the energy sector, the cost of fuel is a critical factor for industries and businesses that heavily rely on transportation, as explained in the article. Furthermore, the financing aspect plays a significant role in determining the affordability of fuel, with industries and businesses needing to manage their financial resources effectively to meet operational costs, including fuel expenses.
