A continent squeezed

Europe is the most reliant major economy on diesel. With diesel prices at record highs, this is a major problem.

The conflict in the Middle East and Russian refineries outage have led to tightness in the supply of refined oil products. The gap between already high crude prices and refined products, especially for diesel, has widened. 

Road transport makes up 77% of total diesel and gas oil consumption in the EU. A spike in prices hits not just drivers wallets, but it also pushes up the price of goods and increases the cost of operating machinery.

The EU is uniquely exposed as it is the region most reliant on diesel. Decades of dieselisation in road transport mean that a global middle-distillate shock translates unusually quickly into high European transport costs.

By September 14, we find that drivers are paying a premium of €30 every time they fill up their diesel cars (based on a 50l tank), while a German truck has been forking out an extra €236 a week on average since the beginning of the war. With about 6.2 million trucks on Europe’s roads, this quickly adds up. In total, increased fuel costs for road transport alone cost Europe a whopping €270 million a day, of which €203 million a day is from diesel consumption.

With 30% of Europe’s diesel fleet more than 15 years old, government-funded scrappage schemes could take a large chunk of the current diesel car fleet off the road. If the current diesel premium continues until Christmas, the EU will have spent the same as offering a €2000 scrappage fee for all diesel cars over 15 years old.

The EU needs to take bold action to transition away from oil and ensure that businesses and citizens across Europe benefit from stable and affordable energy prices. Reducing the amount of oil we consume and import is a win-win. It improves economic security, saves costs for drivers, reduces geopolitical uncertainties and decreases our climate impact.

In the short-term:

In the longer term, the EU should: