Competition may help lower fuel prices in Spain

28th July 2008, Comments 0 comments

National Energy Commission report recommends greater competition for pumps to bring down petrol prices in Spain.

28 July 2008

MADRID - Much to the relief of motorists in Spain, global oil prices have receded in 10 days by 15 percent to USD $124 per barrel.

Even so, this long-awaited fall has not been felt significantly by car owners when they tank up.

While some point the angry finger at oil companies, these have in turn passed the blame onto "expensive" stocks purchased before the oil bubble burst.

In order to understand how fuel prices at the pumps behave, the National Energy Commission (CNE) wrapped up last week a study it started in November 2007 that aimed to find answers on why prices were constantly higher in this country when compared with the rest of Europe.

Surprisingly, the 34-page report does not pinpoint any clear culprit such as possible price-fixing between oil companies as the cause of higher prices at the pumps. However, one of the conclusions is that oil companies that operate service stations should be "put under greater scrutiny" by the CNE, and that more measures be implemented to fuel greater competition.

Even though the conclusions and language that the CNE uses in the report are carefully chosen, it does make mention of how non-leaded 95-octane gas prices could benefit from greater competition.

Another important point of the report is that prices at the pumps in Spain should follow the trend in the European Union and should not depend so heavily on international oil prices.

Apart from recommending "greater competition" as a remedy for high gas and diesel prices, the CNE said that costs incurred by service stations and distribution networks had the greatest impact on high prices at the pumps.

[El Pais / Expatica]

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