Gasoline prices in Germany reached a record high of 1.62 euro per liter, a day after Russia raised export duties by 44 percent to ensure domestic supply. Earlier this week, oil companies reported huge profits.
Pouring ever more money into the tank
Drivers in Germany about to return from Easter holidays will face a nasty shock as gasoline prices on Friday reached a record high of around 1.62 euros per liter ($2.41). That's even higher than the 2008 record of 1.59 euros per liter.
The latest factor to drive prices up was an announcement by Russian Prime Minister, Vladimir Putin, that Moscow will impose a 44 percent export duty on gasoline from May 1 to halt exports and fight a domestic fuel shortage.
"The export duty is temporary, but it may stay in force until August," Putin said.
In February, as global prices surged, Putin imposed a price cap at gas stations to keep prices down. Instead, Russian oil exports boomed in the first quarter of this year. That led to a shortage on the domestic market. The export duty is now seeking to reverse this.
Germany indirectly affected
"That's not so tragic for Germany, because Germany does not import gasoline from Russia, but it does affect general supply," Dr. Karin Retzlaff from the Association of the German Petroleum Industry, MWV, in Berlin, told Deutsche Welle.
On Friday, the wholesale price of gasoline in Rotterdam, Europe's main market, rose to a record 59 cents a liter. "The last time petrol prices reached a record high, in 2008, wholesale super cost 55 cents per liter," Dr. Retzlaff recalled.
Expensive drive home
The record petrol prices of 2008 seem cheap today
"Gasoline prices always tend to go up towards the end of the week when commuters drive home," said Andreas Hölze, press spokesman for the German Automobile Association, ADAC.
"Prices also rise sharply during the holiday season and, right now, many holidaymakers are planning to return to their homes in Germany from Easter vactions."
There's also been the E10 fuel fiasco in Germany, with many drivers shunning the new biofuel, fearing it might damage their cars, and continuing to filling up their tanks with super or regular gas.
Global demand is soaring
In addition to Russia's petrol export tax, demand for gasoline has risen sharply, especially from fast-growing nations like China and India. China has been expanding its network beyond established mineral oil suppliers in Asia and the Middle East.
In April this year, the Secretary-General of the oil producers' cartel OPEC, Abdullah El-Badri, expressed concern over the high price of oil, but said the supply was adequate. "What is certain is that we will see a rise in demand," he said.
Iran, which currently chairs OPEC, said it expects global crude prices to rise further by the end of 2011.
Oil companies report big profits
This week Anglo-Dutch oil giant Shell announced that net profits surged by 60 percent to six billion euros ($8.9 billion) in the first quarter as the group benefited from booming oil prices. BP also announced that, for the same time frame, its quarterly profits leapt 17 percent to 4.9 billion euros while ExxonMobil reported nearly 7.4 billion euros in quarterly profit.
Author: Wilhelmina Lyffyt (Reuters, AFP, DPA)
Editor: Susan Houlton
European Union ambassadors meeting in Brussels have reached a preliminary agreement on stepping up sanctions against Russia over Ukraine. The proposals are to be reviewed next week.
A food safety scandal in eastern Asia has escalated as McDonald's Japan said its restaurants had taken products made with Chinese chicken off the menu. The chain's Hong Kong wing also halted sales of Chicken McNuggets.
Unexpected by analysts, Russia's central bank has again raised its main interest rate. The lender said it needed to shield the national economy from tightening sanctions over its protracted conflict with Ukraine.