Review article

Changes on motor fuels market

Fedor Reščec ; grad. mech. eng.

Abstract

For several decades during the last century, the changes in production of motor fuels and their specification affected mainly motor gasoline. One of key requirements was to increase octane number, but at the same time the use of lead additives was restricted. Refineries started to introduce new process technologies and new organic additives in order to increase octane number. Therefore manufacturing of motor gasoline became more expensive than diesel, and consequently prices of gasoline went up. Cheaper diesel fuel and improved efficiency of diesel engines stimulated the development of cars with diesel engines and boosted their sale.
The first European motor fuel standard was introduced in 1989, and after that in intervals of few years new standards for motor gasoline and diesel fuel were enforced. New quality specifications have been more stringent for diesel fuels because of higher sulfur content. The costs of sulfur recovery increased overall production cost of diesel fuel.
While in the 1990s the prices of motor gasoline were significantly higher than prices of diesel fuel, in the current decade the price difference decreased. In the middle of this decade diesel fuel became more expensive than motor gasoline in the European wholesale market. There are two reasons for this: higher production cost and overgrowth of diesel fuel consumption compared with motor gasoline, which disrupted the balance between demand for diesel and capabilities for its supply. In Croatia, the motor fuels price ratio change appeared with some delay because the taxes on motor gasoline have been significantly higher than the taxes on diesel fuel, which should be corrected. A minor increase of excise tax on diesel fuel would contribute to bringing into balance consumption of gasoline and diesel fuel, and at the same time an increase of excise tax of only 40 lipa/l would bring more than half billion kunas to the state budget.
In the situation when fuel prices are administratively restricted, as was the case in Croatia, disturbances in the market should also be mitigated by administrative measures, at least partly, in order to create conditions that resemble free market.
The process of correction of disturbed relationship between demand and production capabilities of various motor fuels will protrude for several years in Croatia because the structure of car fleet must be changed first, therefore it is a serious failure that the above problems have not been identified and resolved. The decisions should be made immediately and then efficiently implemented.

Keywords

motor fuel; motor gasoline; diesel fuel; market; price; excise tax

Hrčak ID:

43015

URI

https://hrcak.srce.hr/43015

Publication date:

30.10.2009.

Article data in other languages: croatian

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