The price of petrol and diesel in Switzerland has seen meteoric rises in the last week. As drivers in Switzerland feel a pinch at the pumps, it begs the question: why are fuel prices rising now?
Switzerland was awash with angry drivers last week, as the price of petrol and diesel reached new heights. Customers vented their frustration on social media and at fuel station workers, as the high prices bite those who rely on driving for work and lower-income earners.
The price for crude oil - the product refined into petrol and diesel - has remained in flux in recent weeks. Here are some reasons why:
For nations that rely on oil exports to sustain themselves, like those in the Middle East, a large drop in the price of oil can send shock waves through societies and severely hurt economies. That is why many oil-producing countries limit the production of oil to protect themselves from falls in the price of oil.
For example, during the COVID pandemic, the demand for oil fell dramatically as nations locked down. This sudden drop in demand meant oil prices plummeted to 24,23 US dollars a barrel in March 2020, which led to many countries in the OPEC group - a collection of the largest oil-producing countries - cutting production to increase the price.
The low production led to increased demand and gradual price rises. However, these new rises were not mitigated by an increase in production, which meant that oil prices continued to increase. Oil prices had already risen by over 25 percent between Christmas 2021 and February 2022, before the war in Ukraine had even begun.
Despite not being included in the majority of sanctions against Russia, the invasion of Ukraine and subsequent acts committed by the Russian state have warded traders off Russian oil. This has led to far higher demand for European and American oil, which saw extreme price jumps in the first few weeks of the conflict.
The shock caused by the sudden invasion led to price rises on products primarily sourced from Russia. Panic bred panic as those who saw the increasing price of oil scrambled to secure other utilities such as heating oil. Wholesalers for petrol and diesel also put up their prices, leading to significant price hikes for consumers.
On average, a litre of petrol in Switzerland costs around 2,23 Swiss francs, while diesel costs 2,35. However, regional differences remain, mainly due to customers' willingness to pay the increased charge.
For example, Watson reported that the average cost of petrol and diesel in Canton Zurich is a few rappen (centimes) more a litre than in Aargau, Solothurn or Biel. Differences can be even more pronounced, with reports that a petrol station in Zurich Seefeld was charging 10 rappen more per litre than one in the rural areas around St. Gallen.
While predictions remain shrouded in the fog of uncertainty, the price of crude oil has seen big falls in recent days. Prices dropped by 15 percent over the weekend, as the market stabilised - albeit at a higher price than before the crisis.
According to Watson, petrol station owners are also confident that prices will continue to drop, and that this will be reflected by the lower numbers on the billboards in petrol station forecourts. However, for the sake of competition, they have not revealed the size of the saving that they will pass on to consumers.