Fuel prices in Poland have fallen, while in other countries they remain high

The reduction in VAT reduced the price of gasoline in Poland by 60-80 groszy per liter. However, outside of Poland, it is difficult to find lower fuel prices due to the high price of crude oil. Yesterday representatives OPEC decided on a slight increase in oil production, which in the current situation will not translate into a drop in prices.

About the author

Pawel Majtkowski - analyst eToro on the Polish market, which shares its weekly commentary on the latest stock market information. Paweł is a recognized expert on financial markets with extensive experience as an analyst in financial institutions. He is also one of the most cited experts in the field of economy and financial markets in Poland. He graduated from law studies at the University of Warsaw. He is also the author of many publications in the field of investing, personal finance and economy.

The government saves us with lower VAT?

VAT change from 23 to 8 percent lowered gasoline prices at Polish filling stations by PLN 60-80 per liter. The price of fuel in Poland has returned to the level we observed when crude oil worldwide cost $ 40-50 a barrel. Now though oil remains much more expensive. This means that outside of Poland, fuel prices remain high. This can be seen, for example, at the stations near the border with Slovakia or Germany, where queues of foreign customers are formed. It is also worth remembering that the reduction in VAT resulted in a sharp drop in the price of fuel, but its price still depends on the market price of oil. And when oil rises, prices at the stations will rise.

OPEC increases production

Yesterday, representatives of the OPEC Plus countries, during a meeting lasting only 16 minutes, decided to Fr. moderate increase in oil production by 400 thousand barrels a day. This is a confirmation of the plan that was approved last July. Production is expected to increase from next month. However, in the recent period, the organization usually does not fully meet its goals of production increase, hence the actual production increase may be lower.

Currently, the price of crude oil is around $ 90, a level that we have not seen since the last cycle of price increases in 2011-2014. The current decision by OPEC to slightly increase production is unlikely to stop the further increase in the price of the raw material. Oil is expensive because of the strong global demand and limited supply. Investors also use oil, like other commodities, as a hedge against high inflation.

They are also of great importance for this market concerns about the Russia-Ukraine situation. A possible escalation could push up oil prices to even higher levels at a rapid pace. In such a situation, OPEC would probably be subjected to considerable pressure to increase production. However, Russia is one of the key members of OPEC Plus (its representative is the vice-president of the organization), which has an impact on the group's decisions related to Ukraine. Over the past few months, OPEC has resisted the pressure of the US and other large oil consumers quite successfully
to increase production.

High prices are good - for the industry and producers

Such high prices remain beneficial for the producer countries and also for the fuel industry. For oil companies listed on the stock exchanges, the current oil prices are twice as high as the profitability threshold for production. This means that companies have additional profits to pay dividends as well as finance the decarbonization process. Currently, the fuel industry is the cheapest sector on the market in terms of P / E ratio. In this context, it is worth taking an interest eToro @OilWordWide theme wallet. And also for a wider portfolio diversification @GoldenEnergy, which consists of gold and energy resources, and @RenewebleEnergyto invest in the energy technologies of the future.