The Rise of Gasoline Cost in Europe

Energy - September 9, 2023

Causes, impacts and effects on national economies of fuel price rises

The cost of petrol has become an increasingly important problem in Europe, causing concern among citizens, businesses and governments. As fuel prices fluctuate constantly, it is crucial to understand the causes of this trend, the impacts on national economies and possible solutions to address the situation.

Several causes contribute to the constant increase in petrol prices in Europe and one of the main influences is represented by the international crude oil market. Oil prices are subject to fluctuations due to geopolitical, economic and environmental factors, including regional tensions, supply disruptions, global demand and production policies of major exporting countries. Fluctuations in oil prices directly affect the cost of refined fuels, such as petrol, but another factor is represented by taxes and duties, which are particularly relevant in countries such as Italy. Fuel taxes can vary greatly from country to country and can have a major impact on the final price of petrol. In some countries, taxes can account for more than half of the total price of fuel, and duties imposed on imports and exports can affect the availability of refined oil and contribute to price instability itself.

The increase in petrol prices can have significant impacts on national economies and one of the main effects, if not the most worrying, is the increase in costs for consumers and businesses. Households have to allocate a greater part of their budget to fuel, thus reducing the availability of resources for other goods and services, thus reducing their contribution to the general market. Firms, on the other hand, may see their operating costs rise, with potential consequences for profitability and employment. Furthermore, rising petrol prices can generate inflation and higher transport costs can trigger an inflationary spiral, as firms could raise the prices of goods and services to cover rising costs with inevitable negative impacts on economic stability and the economic well-being of citizens.

In addition to the financial impacts, the high cost of petrol has significant environmental consequences since high fuel prices can influence consumption and mobility patterns by encouraging, on the one hand, the adoption of vehicles with lower fuel consumption and the use of public transport, helping to reduce greenhouse gas emissions and air pollution but could, on the other hand, discourage the purchase of more efficient cars, leading to an aging vehicle fleet and lower overall efficiency.

To tackle the problem of expensive petrol in a sustainable way, European governments are adopting various strategies and, one of the main solutions, is represented by the promotion of low-emission electric or hybrid vehicles that help reduce dependence on fossil fuels and improve the quality of the air in urban areas also in the name of the much-promoted European ecological evolution. At the same time, many countries are investing in the diversification of energy sources, seeking to reduce dependence on imported oil in a geo-political context strongly characterized by the war in Ukraine. The adoption of renewable energies, such as solar and wind, for the production of electricity, can help reduce the demand for oil and, consequently, to mitigate the volatility of retail prices of gasoline.

The cost of petrol in Europe is a complex problem involving a number of factors, including fluctuations in oil prices, taxes, duties and economic impacts of various kinds. However, this situation also offers opportunities to promote sustainable solutions, such as the adoption of low-emission vehicles and the diversification of energy sources. Tackling the high price of petrol requires a comprehensive approach involving governments, industries and citizens, in order to achieve greater economic stability and a healthier environment.


Alessandro Fiorentino