If you feel the price of your pump is high now, it’s probably just the beginning, so be sure to ventilate well. At many service stations in France, a liter of gasoline or diesel is just over € 2, but the war in Ukraine and the economic conflict between Russia and the West can make things worse. How far is it? It’s hard to predict, but it’s potentially high, very high. “Depending on the order of the events, 1 liter of petrol for 3 euros is possible, which is plausible,” warned CBC Bank Chief Economist Bernard Köppen.
It’s well known-and somewhat reassuring- “trees don’t reach the sky.” In other words, the market will always find limits on price increases. But as far as black gold is concerned, this glass ceiling is unknown. “Generally, the limit is when prices get too high to find buyers. However, oil is so important to many economic activities in our society that we reach this breakthrough price. “It never happened,” said Philippe Crevel, economist and director of Circle de l’Epargne. In addition, reaching bankruptcy prices is “equivalent to closing our society,” so experts show that it is much better.
The sky is the limit
Attention is focused on Russia, the world’s second largest exporter. Moscow, on the other hand, may decide to cut sales to the West. Reassure the two experts, even if this has a very serious impact on their economy. Something that makes the country think seriously, already in the midst of an economic crisis. But another option could remove Russian oil from our service stations: because the West will stop importing itself. An option advocated by the United States, which makes it easy to be self-sufficient in oil as the world’s largest producer. But to other countries, such a solution would look like an economic seppuku. “Germans who are heavily dependent on Russian gas and oil say they no longer support this option,” said Bernard Keppenne.
If such an embargo on Russian raw materials were to be implemented, it would have serious price consequences. “In this scenario, the liter of gasoline can be very high,” warns the Chief Economist. Same observation with Philip Kleber: “The embargo causes great tension in the market and panics the hoarding move, which only raises prices further.”
A liter of gasoline of 3, 4 or 5 euros can even be a secondary problem. Cars, planes … “, proceed to Bernard Köppen.
In fact, it wouldn’t be so easy without Russia. Especially in Europe, Moscow accounts for 27% of black gold imports. “Production in other OPEC countries seems to be stagnant. Iran has been banned from the European market, and even if the ban is lifted, it is uncertain whether Tehran agrees to serve as a western firefighter. No, “says Philippe Kleber. Importing oil from the United States across the Atlantic is very expensive and requires major restructuring. close? “In the short term, even if we could find an alternative to Russian oil, it wouldn’t happen in a few months, so we would suffer,” Bernard Keppenne warns.
Besides, this is just the beginning
Of course, Europe has strategic stockpiles for this winter. But that only changes the problem. “The stock rebuilding will take place in late winter, early spring, or in just a few weeks. The current crisis can seriously impact next winter’s inventories,” Philippe Crevel said.
As the crisis is set to continue, especially as war adds structural problems, “world oil production may have peaked and investment in the quest for new high-productivity areas has ceased. Result: Prices had already risen before the conflict began, “recalls the director of Structure de l’Epargne.
Searches for these deposits may resume as Russian taps may be cut. But that also takes time. Therefore, the dark moon is waiting for the French on the price side of the pump. Still … if Russia’s embargo lasts for a couple of years, it looks like an optimistic scenario, “warns Bernard Keppenne.