Research shows consumers are victims of slow price decline at the pump

Filling station owners have benefitted significantly from price fluctuations on the global oil market. Many motorists already anecdotally speculated that prices at the pump rose faster than they fall when oil prices change, and this has now been proven. According to economics journal ESB, research showed that consumers spent 2.2 to 4.8 euro cents more per liter of petrol due to the time delay that it takes to factor in oil price decreases.

That leads to consumers spending several euros more every time they fill up the tank. The research was conducted from 2007, and continued to last year.

Researcher Stef de Jong gave several reasons for the fact that the price at the pump falls less rapidly than it rises. Consumers generally do not quickly consider alternatives, in part because it is not always easy to compare prices. There also seems to be a kind of tacit agreement among filling station owners to implement price reductions more slowly, so that they jointly keep the price high for longer.

In addition, according to the research, it is more difficult for petrol suppliers to implement price reductions. This is because their options to store fuel when it is cheaper is more limited, and filling station owners can wind up footing the bill when prices fluctuate rapidly.

De Jong said that it could help to make it obligatory for station owners to publish their prices online, so that drivers can compare them more easily. Something similar is already happening in Germany.

Questionable business practices could also be prevented if the supervisory authority, the Netherlands Authority for Consumers and Markets (ACM), were allowed to take more action. ACM’s function is currently limited to monitoring mergers and collusive price agreements which are prohibited, but according to the researcher this could be expanded.

After the outbreak of the war in Ukraine, the recommended retail prices at the pump rose rapidly, reaching a record high of 2,505 euros per liter of Euro95 petrol in June 2022. According to consumer collective United Consumers, that recommended retail price is now 2,095 euros. Those prices are usually only sought by stations located along major highways, whereas prices tend to be cheaper away from the highways.