Norway’s notoriously high prices for petrol at the pump have spiked again, to nearly NOK 20 per liter in some areas, or around USD 9 a gallon. The fuel price rise is raising eyebrows as well, as Norwegians hit the road for holidays at home during another Corona summer.
Prices for the lowest grades of gasoline in the Oslo area were around NOK 17.95 on Wednesday, and NOK 16.95 for diesel. They tend to be lowest in Oslo, because of economies of scale, and higher in outlying areas where more transport is involved.
They’re highest in Northern Norway, where gasoline stations in the Tromsø area are posting pump prices of more than NOK 19. Tromsø also imposes an extra fuel tax in addition to those that amount to more than the price of the fuel itself.
It all means that Norwegian motorists who haven’t already switched over to electric cars are now stuck with very high bills when they fill up. “It’s understandable that some people are reacting to the price levels we’re seeing out there now,” Knut Hilmar Hansen of Norway’s largest chain of gasoline stations, Circle K, told state broadcaster NRK on Wednesday. Circle K took over the former Statoil stations several years ago.
Higher oil price and lots of demand
Hansen blames a “considerable increase” in prices for gasoline and diesel in the international market in recent months. Oil prices have also risen to more than USD 75 a barrel.
Hansen and analyst Bjarne Schieldrop of SEB (Skandinaviska Enskilda Banken) also point to the summer driving season, which is having a greater effect on demand than normal. With most Norwegians spending their summer holidays at home in Norway this year because of uncertainty over Corona-related travel restrictions, demand has soared.
“We have to expect that these (high) pump prices will last through the summer,” Schieldrop told NRK. “Then driving will slow down and the petrol premium over oil prices will decline a bit during the autumn.”
May fall back in the fall
The big question, Schieldrop said, is what will happen with oil prices. Some predict they’ll rise back up to as high as USD 100 a barrel again as economic activity resumes after the Corona crisis eases. He thinks oil prices will decline, however, and fall to around USD 65 a barrel during the fourth quarter “as things normalize” and US production picks up again.
Per Magnus Nysveen, chief analyst at Rystad Energy in Oslo, linked the high oil prices to “very high activity” at refineries as they prepared for what he called “an unusually strong” driving season this year. “That’s because so many people in many countries are spending their holidays in their own countries this year and they’re driving,” Nysveen said. “That drives up the gasoline (petrol) demand and the refineries have to work hard to produce so much that’s needed.”
He also thinks pump prices in Norway, already among the highest in the world because of lots of taxes, will “relax a bit” after the summer, along with the price of oil. In the meantime, Norwegians can expect to pay several hundred kroner to fill their tanks, equivalent to as high as USD 100 or more.