The Rising Cost of Diesel Compared to Gasoline
The conflict between the United States, Israel, and Iran has dramatically affected the energy industry, resulting in soaring fuel prices. In Spain, diesel has quickly climbed to prices that exceed those of 98 octane gasoline, making it the most expensive fuel available at the pumps.
The Current Fuel Price Landscape
According to data from the Ministry for the Ecological Transition, the average price of diesel this weekend reached approximately €1.96 per liter. In comparison, the price of 98 gasoline hovered around €1.97 per liter. This ongoing discrepancy indicates a mounting challenge for millions of drivers, transporters, and industries reliant on this fuel.
How We Arrived Here
The eruption of conflict in the Middle East on February 28 acted as a catalyst for the price increase. Since then, gasoline has seen a price surge of around 18.9%, while diesel increased by about 31.1%, as reported by the Organization of Consumers and Users (OCU).
Underlying Problems
Diesel prices are influenced by more than just the price per barrel of oil; structural factors play a crucial role. Iran’s control over the Strait of Hormuz, a vital passage for maritime oil transport, means any disruption in that region can have immediate repercussions on international prices. To mitigate rising fuel costs, the Spanish government has announced a VAT reduction from 21% to 10%.
In conjunction, initiatives from the International Energy Agency have led to the release of up to 11.5 million barrels from strategic reserves. Despite minor price adjustments following these measures, diesel remains more expensive than 98 gasoline.
Why Diesel Prices Escalate Faster
During energy crises, diesel prices tend to rise more sharply than gasoline’s. This is largely due to Europe’s heavy reliance on diesel imports from the Middle East. The tax advantages that diesel once enjoyed in Spain have diminished as its international price escalates.
Compounding this issue is the reduction in refining capacity across Europe. According to the Financial Times, around 400,000 barrels per day of refining capacity will be lost by 2024, exacerbating an already tight supply. The sanctions on Russia, a crucial supplier for nearly half of Europe’s diesel imports, further strained the market, forcing a complete reevaluation of the supply chain.
The Dominance of Diesel Vehicles
In Spain, approximately 57% of the vehicle fleet runs on diesel. Of these, around 15 million are private cars dependent on this fuel. Despite a decline in new diesel car sales—recently representing only about 4.05% of passenger registrations—the reliance on diesel remains significant. The slow renewal of the vehicle fleet, coupled with the high costs of new vehicles and limited electric car availability, contributes to this ongoing dependency.
The Impact on Transportation and Prices
The ripple effect of high diesel prices extends beyond personal vehicles to commercial transport. A staggering 98.7% of commercial vehicles and nearly 93.8% of light commercial vehicles utilize diesel. As transportation costs soar—accounting for about a third of trucking companies’ operating expenses—the price of goods in supermarkets is inevitably affected.
For long-distance trucks, fuel consumption can exceed 4,000 liters per month. With diesel prices increasing over 30% in recent weeks, the transport sector faces significant pressure. Unlike private drivers who can opt for alternatives like public transportation, truckers have no such options—and such increased costs will ultimately be passed on to consumers.