Profit Uncovered

According to the Comisión Nacional de la Energía, petroleum companies increased their profit margins thanks to an 8% increase in prices during 2012, despite consumption having fallen to 1990’s level. Evidently, the price at the pump has not been governed by supply and demand.

The golden months for the petroleum companies were August through to September, when prices at the pumps for gasoline was 1.5 euros per litre. After summer prices dropped thanks to pressure from the Government. Several reports from the CNE and the CNC (Comisión Nacional de Competencia) had indicated that the petroleum companies had obtained a considerable margin of profit at the expense excessively high pump prices.

“They must adjust their margins in the same way that other sectors are doing,” admonished the Minister of Industry, José Manuel Soria.

The CNC and CNE consider that from the beginning of October the “Monday Effect” came into being; on Mondays, prices at the pump were cheaper only to creep up during the rest of the week. It doesn’t appear to be a coincidence that Mondays are precisely the day of the week that the government regulators carry out their checks.

The Associación de Operadores Petroliferos (AOP) declined to make any comment on the subject. They only offered the same explanation that is often used by them: the gross margin does not correspond directly to profit, as within that area there are expenses such as distribution, logistics, etc. The gross margin is the difference between the International Reference price and the price at the pump before taxes.

(News: Spain)