PETROL pump prices in Spain might hit €3 per litre this summer according to a service station employers group.
Nacho Rabadan, president of CEEES, said: ”I do not rule out any scenario and we could see prices of three euros per litre this summer because demand far exceeds supply.”
Rabadan believes that with the summer holiday season approaching in the Northern Hemisphere, there simply isn’t enough gasoline to go round.
Pump prices in many parts of Spain have surpassed or are close to reaching €2 per litre.
Rising costs though have been slightly blunted by the government subsidy of 20 cents per litre.
One frequent question asked by motorists in Spain is why the price of fuel does not vary in the same proportion as the price of Brent Crude
The Spanish Association of Operators of Petroleum Products(AOP) says pump prices are not directly related to the price of a barrel of oil.
The final price depends on the prices of gasoline and diesel in wholesale markets like the Mediterranean and Northern Europe in Spain’s case.
Since these markets trade in US dollars, the euro to dollar exchange rate is also a significant factor.
There are costs that rarely change including production, distribution and marketing costs, which include wholesaler and retailer profit margins.
The price is also affected by taxes and other associated costs, such as the maintenance of strategic reserves and the contribution to the National Energy Efficiency Fund.
In Spain, liquid fuels derived from petroleum are hit by two taxes: namely VAT at 21% and a Special Tax on Hydrocarbons (IEH).