Fuel Prices: A More Relaxed 2024 in Sight for German Motorists
As the curtain falls on one of the priciest fuel years in Germany's history, drivers are hoping for a more laid-back experience at the pumps in 2024. With a recent dip in fuel costs, ADAC's fuel market expert, Christian Laberer, voiced cautious optimism, stating, "For 2024, I am optimistic that petrol will remain at the current, slightly more relaxed level." The expert also hinted at the possibility of diesel prices falling further when the typical decline comes in spring, marking the end of the heating season (Adac, 2023).
However, this optimistic outlook heavily relies on the oil price, which can escalate quickly in the event of a global crisis. But if the economy weakens, as is expected in regions like the USA and Europe, the oil price could continue to slide, pushing commodity prices back up (Commerzbank, 2023). This optimistic perspective comes on the heels of a year that, while not as extreme as 2022, still claimed the title of the second most expensive fuel year in history.
Fuel Price Swings
Those modest averages conceal the underlying volatility in fuel prices. The difference between the cheapest and priciest days was a staggering 21 cents for E10 and 30 cents for diesel. The crude oil market was hit by two significant forces: a resurgence in the OPEC+ alliance's production, driving the cost of oil above $100 per barrel, and a drop in demand as economies weakened (CNBC, 2023). Additionally, crises, such as the conflict in Gaza and the targeting of ships in the Red Sea, further exacerbated the price fluctuation.
Looking Ahead to 2024
Having weathered these price swings, experts predict that crude oil prices will trend upwards in 2024. Though the USA and Europe are likely to face economic weakness, the demand for oil is expected to rebound, particularly in China (BayernLB, 2023). This will likely drive commodity prices back up, with experts forecasting an oil price of $90.
Despite these predictions, Laberer maintains hope for stable or even falling prices at the pump. His outlook is influenced by the seasonal effect of diesel, the potential for further declines in refineries' margins, and the possibility of the Cartel Office's scrutiny of the oil industry having a positive impact (Adac, 2023).
A Price Jump on the Horizon
However, there is a small price increase to contend with at the turn of the year. This is due to the increase in CO2 prices, which will add around 4.3 cents to E10 and 4.7 cents to diesel. Motorists may want to fill up a few days early to avoid this spike (Adac, 2023).
The Impact on Consumers
ADAC's rough calculations indicate that diesel drivers saved approximately 300 euros compared to 2022, while petrol drivers enjoyed a smaller savings benefit. However, when comparing the costs from 2023 to an expensive year like 2021, the picture changes: the diesel driver faced an additional cost of over 400 euros, while petrol drivers paid an extra 200 euros (Adac, 2023).
Despite the price shift, the overall impact on fuel consumption in Germany remains uncertain, according to data from the Federal Office of Economics and Export Control. Although petrol deliveries saw a modest increase, diesel, which is significantly cheaper, experienced a decrease (Bafa, 2023). The demand for E10, a cheaper option, continues to surge, with it accounting for a whopping 25.6% of domestic petrol deliveries in 2023 (Bafa, 2023).
* * * *
Sources:
