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Aeolus Perspectives 35th Edition: How much really cost the Oil & Gas increasing prices

01-04-2022

Aeolus Perspectives 35th Edition: How much really cost the Oil & Gas increasing prices...

The prices for Gas & Oil are going up and up and the first effects are already seen in refueling at service stations.

The recently compromised global economic balance has not been long in making itself felt. Among the first effects blooming by the current conflicts in East Europe, is the explosive rise in prices of gas and oil stands up. One of the heaviest consequences is the quick and extraordinary jump in prices for gas and oil. In the last weeks, the tariff of Brent oil - the oil extracted in the North Sea - has almost reached the quota of 140 dollars per barrel (in 2021 it ended up to 80 dollars).

The backlashes were immediate: prices in petrol stations have skyrocketed almost everywhere. In the US, gasoline has come to cost one dollar per liter, while in some European countries, such as Italy - also because of a particularly high value of excise duties - within a few days the price for fuel at the pump has exceeded two euros per liter equal to an increase of about 30%.

The increase in price lists is not only an effect of the most recent geopolitical tensions. For years, the market was burdened by a general difficulty in finding crude oil from refineries in various countries, including Algeria, Azerbaijan, Nigeria, etc., as a result of the Covid19 pandemic.

Now the already critical scenario was worsened, making a substantial part of the overall supply of gas and oil unavailable. 

The effects of the Gas & Oil prices growth

All this will weigh on everyone's wallet. Many citizens have begun to experience the effects of these increases. For some, however, they are already a substantial problem, that is to say, the companies operating in the road transport sector which, in an already very critical economic phase, have now to deal with a further surge in management costs.

Many transport companies are rising against expensive gasoline by asking their governments to intervene, for example, by reducing taxes and excise duties. In the meantime, the consequences for the international transport system and logistics will be mainly two:

  • The stop of transport as a protest (already threatened in some countries) will impact the supply chain with delays in the service that are added to the delays that have globally penalized supplies and procurements for several months.
  • The overall cost of transport and logistics is going to rise further, penalizing both the companies' economic management and the demand for consumption

For this one as for other critical issues in the last two years, a short-term vision has set the condition because we have now to face an extremely compromised emergency with last-minute solutions - i.e. bonuses or tax reliefs - which in the immediate future can, maybe and hopefully, stop the bleeding, but it could not be enough to heal the wound completely.

TAGS: Global, Aeolus perspectives, Transportation, Logistics
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