Changes in fuel prices have become a hot topic recently. End users question why diesel became more expensive than gasoline and what trends are expected for future. Public Company ORLEN Lietuva, as the only crude oil refinery in the Baltic States, in response to the interest and concern of the public and mass media, decided to comment situation in global market and to name main reasons which shaped the prices of gasoline and diesel.
Fuel prices are influenced by the situation on the oil market and the situation on fuel markets. They are governed by the mismatch between the supply structure and the demand structure when it comes to the quality of the oil. The world needs more diesel because of IMO (International Maritime Organisation) and the whole increase in demand for oil comes from the USA, where ultra-light oil is extracted, from which up to 60% of gasoline is obtained. As a result, diesel demand is pulling up oil prices and high oil prices are driving US oil production.
The oil from mid-land cannot be exported, so its price decreases and refineries pay to re-work it, supplying more gasoline than diesel. Demand for gasoline in the US has weakened, so more gasoline is exported, mainly to the Atlantic basin. The result is a drop in gasoline prices, which started a month earlier than the drop in oil prices due to the decrease of concerns about the restrictiveness of sanctions on Iran. At that time, diesel prices were rising and were above the price of gasoline. The price relation did not change after the fall in oil prices and it will take some time before the transmission infrastructure for oil from the mid-land will be launched.
In the nearest future the prices of both diesel and gasoline are likely to decrease as it is observed in the market that the prices of crude tend to decrease. It depends on variety of factors whether this forecast turns into reality - crude and petroleum product global markets are very volatile therefore daily global events and their chains may have unpredictable effect on the final price of that day.