Pump prices are not falling in Switzerland: refining constraints and the Rhine

Context

TL;DR

• Flows from Hormuz remain 30-40% lower.
• Crude oil is close to 100 dollars per barrel.
• Cressier halted production for two weeks.
• About half of road fuel arrives via the Rhine.

Key facts

Since the beginning of September, the price of crude oil has remained close to 100 dollars per barrel, but the partial resumption of tanker traffic through the Strait of Hormuz has not had a significant impact on that price. Olarreaga describes the pass-through to gasoline separately: in Switzerland, the transmission of oil shocks to pump prices takes time.

The situation in the Middle East remains tense. Marcelo Olarreaga, a professor of economics at the University of Geneva, notes that the volumes transiting through Hormuz are 30-40% lower than pre-conflict levels. If the previous level is set at 100, the stated percentage corresponds to a range of 60-70: this is a calculation based on the figure provided, not a measurement in tonnes or in the number of tankers. The percentage reduction therefore concerns transit volumes, not an amount of fuel sold at the pump.

The market before refueling

The market remains characterized by variable quantities of oil and prices under pressure. The resumption of maritime traffic has therefore not significantly changed the benchmark for crude oil, which the source places close to 100 dollars per barrel since the beginning of September. That figure is expressed by the source as the price of crude oil per barrel; the text discusses fuel prices at the pump separately. The source therefore does not provide a price per litre.

The Confederation depends considerably on imports of already-refined petroleum products. For this reason, according to Olarreaga, oil market shocks reach gasoline prices with a considerable delay, especially when oil prices fall. Increases, however, are reflected much more quickly. The source does not indicate a precise amount for any possible reduction at the pump, but describes the factors that determine the timing: still-reduced maritime flows, crude oil prices and imports of already-refined fuels.

Operational details

The source's most concrete comparison emerges from looking at two points in the supply chain cited by Moreno Volpi, a member of the TCS management: the Cressier refinery and the Rhine waterway. The two episodes do not describe the same constraint. In the first case, the source speaks of limited refining capacity; in the second, of smaller quantities that can be transported by ship.

Two constraints, two bases of comparison

In the first case, the available data are an episode with a duration and a price response; in the second, a share of supply accompanied by a logistical mechanism. For Cressier, Volpi attributes the sudden spike in pump prices to the two weeks during which the only refinery in Switzerland halted production: with refining capacity reduced, demand became concentrated on a more limited supply.

The Rhine introduces a different basis. The source describes a lower loading capacity when the water level falls. The transport of oil and fuels thus becomes more expensive; the figure of about half indicates the share of fuel intended for road traffic in Switzerland that arrives via this route, not a share referring to all oil.

The documented relationship is therefore between available capacity and final costs: reduced production coincided with a sudden increase at the pump, while a waterway with reduced transport capacity raises logistics costs. The source does not, however, attribute a percentage of the increase to Cressier or the Rhine, nor does it establish which of the two factors has a greater impact. The periods are also not equivalent: two weeks are indicated for the refinery; no duration is given for the Rhine's low water level.

Key points

The text also makes it possible to delineate what cannot be turned into a forecast about prices at the pump. The clearest element is the asymmetry indicated by Olarreaga: when oil prices fall, the pass-through to gasoline prices takes time; when they rise, increases are reflected much more quickly. This indication describes a different transmission speed, but does not provide a date for the decline or a percentage reduction. The partial reopening of Hormuz is not linked by the source to a precise date for an effect at the pump.

The conditional regarding the Rhine

Volpi's sentence about the Rhine should also be read for what it says. A possible rise in the Rhine's level is presented as a rare possibility of a reduction in fuel prices in Switzerland. The conditional does not indicate that the level has already risen and does not quantify the effect at the pump. The same source specifies that the crises affecting the world will not lead to a doubling of refining capacity: the indicated limit therefore concerns refining capacity and a possible logistical condition, not a timetable for price reductions.

The reconstruction makes it possible to distinguish the available data from the questions left open. It indicates the crude oil benchmark, close to 100 dollars per barrel since the beginning of September, the 30-40% reduction in volumes compared with levels before the conflict, the interruption at Cressier for two weeks, and the role of the Rhine in supplying about half of the fuel intended for road traffic. It does not, however, indicate the price of gasoline at the pump, the extent of any possible reduction, or when it might occur. Without these values, it is not possible to derive from the source a calculation of the savings for motorists.

Finally, electric mobility remains. The source observes that rising fuel prices seem to be encouraging growing interest in this solution, but does not accompany the observation with figures or a measure of the change. It is therefore a reported trend, not an estimate of its spread. The documented picture remains one of cost pressure linked to refining, supply and logistics, while the connection with electric mobility is formulated cautiously.

To compare the topic of fuels with other spending items, consult cost of living in Switzerland.

Source: rsi.ch