GLOBAL FUEL CRISIS: From Nigeria To Australia, America To Britain, Canada And Asia, Why Drivers Everywhere Are Paying More
Reloaded News Desk
Fuel prices are rising across major economies and energy markets as the war involving the United States and Iran disrupts oil flows, raises shipping costs and squeezes supplies of refined petroleum products.
The shock is being felt far beyond Nigeria.
From the United States and Canada to Britain, continental Europe, Australia and Asia, motorists are facing higher petrol and diesel prices, while governments and energy companies are searching for ways to cushion consumers from a rapidly changing global market.
The International Energy Agency has described the disruption as the largest supply disruption in the history of the global oil market.
The Strait of Hormuz, through which about 20 per cent of global oil consumption normally passes in the form of crude and petroleum products, has seen shipping activity fall sharply. The IEA said the reduction in flows has pushed crude prices above $100 a barrel and caused particularly severe increases in diesel, jet fuel and LPG prices.
On Thursday, Brent crude was trading around $103.51 a barrel, while US West Texas Intermediate was around $92.51, after oil prices rose sharply the previous day. Markets remain sensitive to the lack of concrete progress in US-Iran diplomatic efforts.
UNITED STATES: DIESEL PASSES $6 A GALLON
American motorists are experiencing a substantial increase in fuel costs.
The latest US Energy Information Administration data released on September 22 put the national average price of regular gasoline at $4.478 per gallon for the week ending September 21.
Diesel has risen even more sharply, reaching $6.529 per gallon nationally.
That represents a weekly increase of about 16 cents for gasoline and 24 cents for diesel.
The regional differences are significant.
California’s average gasoline price was about $6.003 per gallon, while diesel reached $8.246.
On the US West Coast, diesel averaged about $7.456 per gallon.
The pressure is also producing a political response in Washington, with discussion around possible restrictions on diesel exports as officials consider ways of protecting domestic supplies.
Energy analysts have warned that restricting exports could have consequences for international markets as well as domestic prices.
CANADA: PUMP PRICES REMAIN UNDER PRESSURE
Canadian motorists are also experiencing the effects of the global energy shock.
In Toronto and the Greater Toronto Area, the expected average pump price for September 24 was C$1.839 per litre, following a C$0.03 increase at midnight.
Prices have moved sharply during September, with the Toronto figure reaching C$1.899 per litre earlier in the month.
The Canadian situation is particularly sensitive to developments in the US market because of the close integration of the two countries’ energy systems.
The possibility of restrictions on US diesel exports has therefore become an additional concern for Canadian consumers and businesses.
BRITAIN: DIESEL APPROACHES £2 A LITRE
Britain is experiencing one of the sharpest recent increases in pump prices.
The latest September 24 UK fuel-price data put average petrol at about 173.5 pence per litre and diesel at 197.9 pence per litre.
Diesel has increased by about 14.8 pence per litre over the past 30 days, while petrol has risen by roughly 11.9 pence.
The latest figures cover thousands of filling stations across the country.
The increase has renewed concern about the effect of fuel costs on transport, logistics, household budgets and inflation.
For diesel-dependent businesses, the impact extends beyond motorists because higher haulage and delivery costs can eventually feed into the prices of food and other goods.
EUROPE: SOME PUMPS ARE ABOVE €2 A LITRE
The pressure is particularly visible in continental Europe.
In Italy, the latest national average for self-service petrol on September 24 was €2.154 per litre, while diesel averaged €2.338 per litre.
On motorways, the averages were even higher, reaching €2.245 for petrol and €2.419 for diesel.
Across Europe, pump prices have risen as crude oil and refined-product markets respond to the disruption in global supply.
The effect differs from country to country because taxes, subsidies, refinery capacity, currencies and government interventions vary.
But the underlying international pressure is common: crude oil and refined products have become more expensive and more difficult to move.
AUSTRALIA: PETROL ABOVE A$2.40 A LITRE
Australia is also feeling the shock.
The national average for U91 petrol on September 24 was reported at about A$2.435 per litre, up 2.2 Australian cents from the previous day.
Reported station prices ranged from about A$1.950 to A$3.740 per litre, demonstrating the substantial differences between locations and individual markets.
The impact is not confined to private motorists.
Australia’s large distances and dependence on road transport mean that diesel and petrol prices can influence freight, agriculture, construction and the prices consumers ultimately pay for goods.
ASIA: CHINA RAISES FUEL PRICES
China announced another increase in domestic gasoline and diesel prices on September 24 as international crude prices continued to rise.
However, Beijing capped the size of the increase for a second time, limiting the amount of the international oil-price shock passed directly to consumers.
India, by contrast, kept petrol and diesel prices unchanged in major cities on Thursday.
Petrol remained at about ₹102.12 per litre in Delhi, while diesel was around ₹95.20.
In Mumbai, petrol remained around ₹111.21 per litre and diesel around ₹97.83.
The difference illustrates an important point about the global crisis: rising international oil prices do not automatically produce the same-day increase at every country’s filling station.
Governments, state-owned oil companies, taxes, subsidies, price controls and inventory positions can delay or absorb part of the shock.
VIETNAM: ANOTHER ROUND OF INCREASES
Vietnam provides another example of the international pressure reaching retail markets.
Effective from 3 p.m. on September 24, the government increased maximum retail prices for several petroleum products.
E5 RON92 petrol rose to 26,397 Vietnamese dong per litre, while E10 RON95-III increased to 27,087 dong.
Diesel rose to 30,497 dong per litre.
The Vietnamese government said the adjustment reflected global petroleum-price movements while also using the country’s price-stabilisation mechanism to manage the impact on the domestic market.
IRAN AND THE STRAIT OF HORMUZ: THE CENTRE OF THE SHOCK
At the centre of the current energy crisis is the conflict involving Iran and the disruption of shipping through the Strait of Hormuz.
The waterway is one of the world’s most important energy corridors.
Before the disruption, roughly 15 million barrels of crude oil and five million barrels of petroleum products passed through the strait each day, according to the IEA.
That represents approximately one-fifth of global oil consumption.
Recent shipping data show how dramatically the situation has changed.
Reuters reported that only 17 commodity vessels crossed the Strait of Hormuz over one weekend, compared with 37 the previous week and a pre-war average of about 125 vessels per day.
Oil is still moving, but the reduced traffic and the additional risks involved in transporting it have raised costs throughout the supply chain.
Oil producers have also resorted to ship-to-ship transfers around Oman to keep exports moving.
The workaround has allowed some oil to reach international markets, but it has increased transportation costs and complicated an already strained global energy system.
AND NIGERIA!
Nigeria is not outside the global shock.
Petrol prices in Nigeria have also risen as international crude prices increased.
Recent market checks put petrol around ₦1,400 per litre in Lagos and Abuja, with some northern locations reaching about ₦1,500, while diesel has moved above ₦2,000 per litre.
The rise has occurred despite the Dangote Refinery operating at large scale, demonstrating that domestic refining capacity does not automatically insulate a country from international crude-price movements.
But Nigeria’s situation has an additional dimension.
Unlike countries that import virtually all of their crude or refined products, Nigeria is a major crude-oil producer and now has significant domestic refining capacity.
The question is therefore not simply why global oil prices are rising.
It is also whether Nigeria can use its crude production, domestic refining capacity, storage infrastructure and petroleum-market reforms to reduce the extent to which international shocks reach Nigerian households and businesses.
That is a separate policy question from the existence of the global shock itself.
THIS IS NOT ONLY A NIGERIAN FUEL PROBLEM
The figures from different continents tell a consistent story.
American motorists are paying more.
Canadian consumers are facing higher pump prices.
British diesel is approaching £2 per litre.
Parts of Europe are already above €2 per litre for both petrol and diesel.
Australia’s national petrol average is above A$2.40 per litre.
China has raised domestic fuel prices.
Vietnam has increased its regulated prices.
India is holding prices steady despite international crude above $100.
Nigeria is experiencing its own increase.
The differences are substantial, but the common factor is the same global energy market.
The current crisis also demonstrates why the price consumers see at a filling station cannot be explained by crude oil alone.
Crude prices are only one component.
Refining capacity, inventories, shipping costs, insurance, exchange rates, taxes, government subsidies, local distribution networks and the availability of refined products all determine what ultimately reaches the pump.
That is why two countries can face the same international oil shock and experience very different prices.
THE BIGGER DANGER IS DIESEL
The most consequential part of the present crisis may not be petrol.
It is diesel.
Diesel powers trucks, ships, agricultural machinery, construction equipment, generators and a significant part of global commercial transport.
The IEA has specifically identified diesel among the refined products experiencing particularly severe price increases during the current disruption.
When diesel becomes significantly more expensive, the impact can spread through an economy even when a household does not own a diesel vehicle.
A truck carrying food costs more to operate.
A farm using diesel-powered machinery faces higher costs.
A factory using diesel generators pays more for production.
A shipping company faces higher operating costs.
Those costs can eventually be passed to consumers.
That makes the present energy crisis not simply a story about motorists at filling stations.
It is a story about the cost of moving people, food, raw materials and finished products around the world.
WHAT HAPPENS NEXT?
The direction of fuel prices will depend heavily on developments around the Strait of Hormuz and the US-Iran conflict.
If shipping through the waterway normalises and more crude and refined products return to international markets, some of the pressure could ease.
If the disruption persists or worsens, the effects could spread further into diesel, aviation fuel, shipping, electricity generation and consumer prices.
For Nigeria, the lesson is equally important.
The country cannot control the international price of crude oil or geopolitical events in the Middle East.
But it can influence how vulnerable its economy is to those shocks through domestic crude production, refinery efficiency, fuel storage, gas development, alternative transport fuels, electricity reliability and the structure of its petroleum market.
The global crisis therefore provides a useful test for every energy-producing country: how much protection does domestic capacity actually provide when the international market is under severe pressure?
For now, the answer is different from country to country.
But one fact is increasingly difficult to dispute: the fuel-price pressure being experienced in Nigeria is part of a much larger global energy shock.
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