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diesel fuel and destruction of demand: in Italy a 40% drop in consumption with a price above 2 euros. What does the economy do

The price of diesel above two euros is starting to have its grip on demand, and the first signal comes from those in direct contact with consumption. As ASCOM gas station attendants say to Il Mattino di Padova : “We only get 3 cents per liter but the liters have become between 30 and 40% less”. After all, with a price that, although lightened by excessive taxes, exceeds two euros, nothing else is to be expected. Those who are not forced to take the car for work give it up.

This, of course, presents a big problem for categories, such as gas stations, which have a minimal percentage of the price, but still find themselves having to advance huge sums to buy fuels, in the face of reduced sales expectations. However, even if the environmentalists (and the Mattino di Padova) celebrate because people go more by bicycle or scooter, it cannot be ignored that there are some economic problems that arise. A considerable percentage are not people who ride bikes, but people who give up moving and consuming. This is an economic downturn, and I am really curious to see the second quarter GDP data that I expect negative. A destruction of demand of this size was seen only during the covid, but it was expected to be only for a limited period, while that caused by the increase in prices is likely to be permanent.

Furthermore, there is another problem: even if tomorrow oil prices collapsed, and in the last week they have significantly reduced, however this does not mean that we will soon see a drop in the price of fuels, especially diesel: as Business Standard points out, in Generally, according to the International Energy Agency, there is sufficient capacity to refine about 100 million barrels of oil per day, but about 20% of this capacity is not usable. Much of this unusable capacity is found in Latin America and other places where investment is lacking. An expected capacity of around 82-83 million bpd remains. The refining industry estimates that the world has lost a total of 3.3 million barrels of daily refining capacity since the beginning of 2020. About a third of these losses occurred in the United States, the rest in Russia, China. and Europe. Hence sanctions on Russia have further reduced the available refining capacity. For these reasons, the spread between the price of fuel and crude oil is growing, linked to bottlenecks. A problem that is not easy to solve


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The diesel article and destruction of demand: in Italy a 40% drop in consumption with a price above 2 euros. What makes the economy comes from ScenariEconomici.it .


This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/gasolio-e-distruzione-della-domanda-in-italia-calo-del-40-dei-consumi-con-un-prezzo-sopra-i-2-euro-che-fa-leconomia/ on Mon, 27 Jun 2022 13:50:38 +0000.