Price of petrol nears last autumn’s record levels

Oil industry will not estimate which direction prices will take

print this

Prices of petrol in Finland are reaching the record figures of last September. The average price for 95-octane fuel rose to 1,353 euros per litre earlier this week, and at some gas stations the price has exceeded 1,4 euros per litre.
      Hurricane Katrina caused gas prices to rise to a record high last September, reaching an average of over 1,5 euros per litre in Finland.
      The oil industry does not wish to estimate, which direction oil prices will take.
      “It cannot be predicted”, says Mika Anttonen, the CEO of the wholesale petroleum dealer North European Oil.
      According to Henry Hellberg, the director of sales for Shell in Finland, there is still pressure for raising gas prices.
      “The price of petrol will at least not fall during the summer”, says Matti Peitso of Neste Oil. “The price peak is usually in late May or early June, and after that the price has usually come down a little. I am now sceptical of the price coming down for the summer”, he says.
     
CEO of the Association of Petrol Retailers Sirpa Kekäläinen, does not feel that a decline in gas prices at the beginning of the summer holidays is impossible. She predicts gas prices will remain at their current level in the near future.
      According to Kekäläinen the curve representing the wholesale price of petrol resembles an electrocardiogram: during the course of last year the price has gone up 11 times and gone down four times.
     
The price fluctuations are the result of world politics according to the petroleum industry: political instability in oil-producing countries such as Iraq, Iran, Nigeria, and the suspicions about the sufficiency of petrol in the United States during the holiday season in August.
     
According to Mika Anttonen the price of petrol is boosted by a disruption in the market caused by a change in the type of petrol in use.
      Many states are giving up the use of a toxic additive, in favour of ethanol-enriched petrol. The old reserves are being run down, and new petrol will not be bought until the storage tanks are empty.
      “There is nothing dramatic about this. When the change is complete, there will be enough petrol to last all summer. The new type of petrol is more difficult to manufacture and will put additional pressure on petrol manufacturers.”
     
Although the new ethanol-enriched petrol is more expensive than the old type, Anttonen does not believe that prices will remain at their current level.
      “The price of petrol in relation to the price of crude oil varies. Although the new type of petrol is more expensive, it is such a small factor that it will not determine the price of petrol.”
      “The price of oil products has separated from the real economy already 3-4 years ago. The prime factor in determining the price of petrol is what the investment funds that invest in oil products believe”, says Anttonen.
      Last week oil derivatives were bought in abundance, and their stocks rose. The news of the dispute over nuclear power between The United States and Iran was behind this, since it was expected to raise oil prices. If the investors’ faith in oil derivatives crumbles and investors put their money elsewhere, the market can also come down again”, Anttonen estimates.


Previously in HS International Edition:
  Gas prices may rise by ten cents a litre in wake of Gulf Coast hurricane (1.9.2005)
  Large number of MPs would cut fuel tax to keep pump prices in check (8.9.2005)
  Finland to dip into state oil reserves to ease US shortage (7.9.2005)

Helsingin Sanomat