Fuel prices soar notably due to higher oil prices. But is that they will decline as the black gold flow back on world markets? Yes, according to an academic study published last weekend by economists Erwan Gautier (University of Nantes) and Ronan Le Saut (Ecole Polytechnique). Their work is based on data collected daily by the Ministry of Economy between 2007 and 2009 with 10,000 service stations.
Contrary to the fears of the authorities and consumers, "the downward variations are as numerous as the variations on the rise, and they are of the same magnitude," the researchers said. They found instead that managers affect only three-quarters of price changes in international prices of a liter of diesel and two thirds for gasoline. "This gap is consistent with the importance of raw material-the-refined oil in the price of a liter at the pump (between 75% and 85% of total costs)," said Erwan Gautier.
Clearly, if the pump price varies to a lesser extent than international prices, it is because other costs that come into account in calculating the price, they do not move. These findings partly confirm the results of a study by the Ministry of Economy dated June 2011. According to the latter, which examined the evolution of prices for a few weeks, the drop in world prices was reflected better on diesel than on gasoline.
The two economists, however, lead to more accurate results. The petrol stations affect price movements in Rotterdam, where the refined oil is traded in the 5 to 10 days on average. The French Union of Petroleum Industry (UFIP) explains this delay by the time of transport for the supply of pumps and the need to sell existing stocks purchased before the price changes. Prices are revised, preferably on Tuesdays and Fridays, every 5 days on average for diesel, every 6.5 days for gasoline.
Supermarkets change prices more often
All market players are not as quick to change the prices, they detect. Supermarkets, for example, change more frequently and more significantly than other gas stations, belonging mostly to oil companies. This can be explained by the cost analysis Erwan Gautier: "Supermarkets share some expenses related to the operation of the pumps with their store." On the other hand, their margin is extremely low on fuel: it s' is for them a loss leader to attract customers and they are undercutting prices.
In reading the study, the existing competition in the market seems to push the players to pass on price movements as honestly as possible. The proximity of a gas station and a supermarket equipped with pumps, for example, the first incentive to adjust its prices more nimbly. On the other hand, the highway stations, away from any competition, the less impact of international price movements. And, with the exception of the Paris region, rates move slightly more often in urban than in rural. The stations offer many services and high quality fuels also adjust the lowest price movements.
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