We have recently received a number of questions why the variance between petrol and diesel prices is large currently.
Here’s a brief explanation with the reasons why:
- At the start of January 2022, diesel was around £0.04 per litre more expensive than petrol. That differential now sits anywhere between £0.15 to £0.20 higher.
- Mainly, this is due to a shortage of diesel supply in Europe following the Russian invasion of Ukraine (prior to the invasion, around 20% of UK diesel came from Russia), subsequent supply chain issues and upcoming restrictions on the supply of Russian seaborne product into Europe due to come into effect in February.
- Supply shortages in 2022 also led to a drawdown on diesel stockpiles across Europe, with distillate storage estimated to be at a 14-year low in August. As a result, concerns of a diesel shortage in Europe have led to increased prices, particularly compared to petrol.
- Demand for diesel is also significantly higher than petrol, due its to use in commercial transportation and industry. Total UK diesel demand is roughly double that of petrol, again contributing to higher prices for diesel, particularly when supply is short.
- In regard to the fuel ATF supply, both diesel and petrol contain a percentage of renewable bioproduct (Fatty Acid Methyl Ester [FAME] in diesel and Ethanol in petrol). The cost of this bioproduct is more expensive than the cost of fossil product, therefore blending in bioproduct increases the price. However, Ethanol is only around $50/MT more expensive than petrol, whereas FAME is around $750/MT more expensive.