Last year was a bad one for the fuel sector but a good one for drivers as fuel prices fell.
During the first lockdown in March 2020, France’s vehicle fuel consumption plunged by 53 percent. The fall was even higher for the airline fuel kerosene, which dropped by 83 percent.
But since the beginning of 2021, fuel prices have approached their pre-pandemic levels. Diesel prices have increased by €0.09 and unleaded petrol (SP95-E10) by €0.11 since January 1st.
The hikes coincided with the start of rollout of the Covid vaccination programme, which despite its sluggish start renewed the confidence that the country is headed for brighter times.
“If demand increases, it automatically pushes prices up,” Francis Perrin, research director at the Institute of International and Strategic Relations (IRIS), told Le Parisien.
Perrin explained that the vaccination campaign would allow the country’s economy to pick up again following a year of recession. “And with it, energy consumption, and in particular fuel,” he said.
The link between the virus and fuel prices has been clear since the beginning of the pandemic, and the launch of the vaccine programme on December 27th sent prices soaring, as illustrated in the graphic below.
— Le Parisien Infog (@LeParisienInfog) March 10, 2021
While the vaccine programme’s success will be crucial in determining future fuel prices in France, other factors are also important, such as multilateral negotiations on oil prices.
“The capacity of the 23 countries in Opec+ to play collectively will do the rest,” Perrin said, referring to the group of oil producing countries that together impact oil prices worldwide.