Price Per Liter of Gas Exceeds ISK 300 (USD 9 Per Gallon)

Hinrik Örn Bjarnason, managing director of N1.

Hinrik Örn Bjarnason, managing director of N1. mbl.is/Sigurður Bogi

Vala Hafstað

Retail prices of gasoline and diesel  have never been as high as they are now in Iceland, following major price increases worldwide in recent days as a result of Russia’s invasion of Ukraine, which began February 24, Morgunblaðið reports. Yesterday,  it was common to see the liter of diesel priced at ISK 300.9 (USD 2.28; EUR 2.06) and the liter of gas at ISK 303.9 (USD 2.30; EUR 2.08). For comparison, this means that the price per gallon of diesel and gas was about USD 9.12 and USD 9.20, respectively.

“We monitor developments closely and change the price if and when market conditions give us a reason to do so,” states Hinrik Örn Bjarnason, managing director of N1 gas stations. “Those price increases are unprecedented.”

The war in Ukraine is the main reason for the high prices, but we need to go further back for a historical context. During the COVID-19 pandemic, people traveled less than before, resulting in less demand for fuel and lower prices. Then, a few months ago, prices began to approach an equilibrium anew. In early February this year, the world market price of diesel was USD 830 a ton, but had soared to more than USD 1,400 a ton yesterday, representing a 70 percent increase. The world market price of gas at the beginning of March this year was USD 1,000, compared with USD 1,300 yesterday, representing a 30 percent increase in only ten days.

“Of course it has an impact when a large producer and supplier of oil leaves the market, as has been the result of sanctions against Russia,” Hinrik states. “Thirty percent of all fuel in Europe comes from Russia and 8 percent of what is used in the US. US President Biden has tried in vain to have the OPEC countries in the Persian Gulf increase their oil production. So far, there hasn’t been any shortage of fuel in Western countries.”

“Still, nervousness characterizes the major markets of the world, which can be seen in rising prices of all sorts of primary products, including fuel, by as much as tens of percents in a day. Few people have ever seen such price increases, which are partly driven by speculation. What that mean is that prices could decrease again once the outlook becomes clearer. While there is war in Ukraine, we can expect fuel prices to remain high at world markets,” Hinrik concludes.

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