Drivers have not been the only European oil consumers enjoying this year’s slump in prices — those building the roads are also reaping the benefits of a drop in raw material costs.
You’d forgive shipowners for feeling a little uncertain about their fuel bills at the moment. Last year they faced apocalyptic warnings about the rise in costs to come as European and North American regulators cut sulphur limits for bunkers, but then oil prices collapsed. Many are now left wondering when they’re going to start feeling the financial impact of the new regulations.
French prime minister Manuel Valls concedes that nudging French drivers towards buying diesel cars may have been a mistake. As diesel’s share of French motor fuel demand hits a record high, adding to the long list of problems facing the country’s refining industry, it looks like he has a point.
Cautious optimism in Europe is on the rise, with a temporary reprieve for Greece, stock indexes hitting record highs and economic data mostly coming out better than forecast so far this year. But extrapolating fuel demand forecasts for the region is fraught with complications.
As the IEA said in December: “In oil-importing countries, price effects are asymmetrical: Demand lost to substitution or efficiency gains during prolonged periods of high prices will not come back in a selloff… The dollar’s strength and oil sale taxes in some countries will also limit the feed-through from crude oil to retail product prices. In the OECD, a tepid economic recovery, weak wage growth and — last but not least — worrying deflationary pressures will further blunt the stimulus of lower prices.”