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Recovery can be a double-edged sword. The economic forecasts coincide in presenting the advent of a time of sustained advance of the GDP. But the return to activity of more and more factories, businesses and offices is also driving the growth of prices when many households have not yet recovered from the blow of the pandemic to their personal finances. Behind the rise in inflation are general factors, such as the decoupling between a supply unable to cope with the barrage of global demand or problems in supply chains. Also particular circumstances of a single sector, such as the case of the increase in the cost of CO₂ emission rights that pushes the prices of electricity, or the production cuts of the Organization of Petroleum Exporting Countries (OPEC), which does the same with The crude.

In this context, the National Institute of Statistics (INE) announced yesterday that prices rose in Spain during the month of May by 2.7% compared to the same month in 2020. This is its highest threshold since February 2017, when inflation reached 3%. Among the items that grew the most are gasoline (24.2%), diesel (21.4%) and soft drinks (9.5%) —the VAT they support went from 10% to 21% on January 1 – , but electricity stands out especially, whose price increased by 36.3%.

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The data comes in the middle of the debate on the electricity bill, with the Executive looking for formulas to lower consumption. The Government intends to stop the so-called benefits fallen from the sky, the excess remuneration that companies get for the electricity they generate with their nuclear and hydroelectric plants whose works are already amortized. And it has overturned the rates since June, with the differentiation by time sections, which has generated dissensions in Moncloa: two ministers of Podemos have asked to advance the off-peak time from midnight to 10 p.m. from Monday to Friday to lower the bill .

The rise in electricity in May is prior to the entry into force of the new rates and is conditioned by another factor: the rise in carbon dioxide emission rights (CO derechos), which is causing a rebound throughout Europe. In fact, the electricity bill rose in Spain in April by 46% compared to the same month last year, the largest increase since there are records, despite the fact that there were no large peaks in demand or prolonged drops in supply.

This phenomenon did not stop in May, which has led users to have to make an extra financial effort that can continue in summer, the hottest months. Currently these rights are priced above 50 euros per ton, more than double than a year ago.

In the case of fuels, less than three weeks before the exit operation begins, prices have reached levels prior to the pandemic. This week, the liter of gasoline touched 1.36 euros per liter on average in Spain, the highest price since May 2019, when the covid-19 did not yet exist. Below is diesel, which also becomes more expensive month by month and stands at 1.22 euros, the highest since February 2020, just before the closure of borders and the Great Confinement.

Fuel companies understand that many consumers wonder why the price of gasoline is at these levels if their purchasing power has not returned to pre-COVID-19 levels, but they explain that its value is conditioned to the raw materials market . “The prices are set by the international market,” they recall from the Association of Petroleum Products Operators (AOP). “It is the price of oil that has been marking the evolution of gasoline in recent months,” they add.

Ignacio de la Torre, chief economist of the investment bank Arcano, clarifies that the rebound has some distortion when comparing with a year as atypical as the past. The benchmark crude barrel in Europe, Brent, bottomed out in April 2020. Since then it has not stopped appreciating: in just 14 months its price has soared 286%. This rise in prices has dragged down the main fuels, although their rise has not been so intense. From the AOP they point out that there is no exact correlation. “The price of fuel and crude oil do not rise in the same proportion because half of the price of the former are taxes.”

“We can’t do anything,” they defend from the gas stations

Gas station managers are also targeted by drivers when prices skyrocket. Nacho Rabadán, general director of the Spanish Confederation of Service Station Entrepreneurs (Ceees), which represents more than a third of the country’s pumps, shows some impotence due to the speech that indicates them as guilty. “I understand that it is a very sensible price for the average citizen; It is difficult to explain that if the price of a barrel rises we cannot do anything ”. In fact, he maintains that they are the first beneficiaries if fuels become cheaper: “It is proven that fuels are very elastic, if the price falls we would sell more.”

Despite the sharp rise in prices, vaccination and the fall in infections have made it possible to reactivate mobility, and with it the sale of fuel. According to data from Cores, the public entity that controls oil reserves, its consumption in April was 14% below the same month of 2019, compared to a 20% difference in February, when the communities were closed.

The return of global mobility, especially in the US and Asia, already predicts an increase in oil consumption in the coming months, to the point that the International Energy Association (IEA) warned this Friday of the possibility that at the end of the year there will be a certain tension between supply and demand due to the cut in oil exports from OPEC, which the IEA has asked to “turn on the tap”. “Everything is returning to normal. The most widespread official figures speak that world oil demand will return to pre-pandemic levels before the end of the year, “says José Luis de la Fuente O’Connor, professor at the Polytechnic University of Madrid.

The climate issue is the second front that puts downward pressure on crude oil extraction, at the same time that it boosts the price of fuel. The European Union’s goal of achieving climate neutrality by 2050 and recovery funds focused on environmental investment leads big funds to put their money into clean energy. “Environmental concerns are causing many oil companies to stop investing, and if supply falls and demand rises, the price of crude rises,” says Ignacio de la Torre, from the Arcano investment bank.

Another factor is that the electrified vehicle market is already beginning to show signs of a paradigm shift in Spain. 30% of the vehicles sold in May were hybrids or electric, surpassing diesel – just 20% -. This difference, according to De la Fuente, will widen “as the market lowers prices and the recharging infrastructures make trips now complicated by recharging time and availability viable.

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