Alexela executive: Estonia will not run out of motor fuels
Fuel reserves in Estonia would only be used if all logistics routes were cut off and there is currently no reason to worry about motor fuels running out, Alexela's Tarmo Kärsna said.
Is this the largest energy crisis in history?
The problem today is uncertainty about the future. Compared with the beginning of the war in Ukraine, the difference is that a very large share of LNG, or liquefied natural gas, has been affected — meaning it cannot pass through the Strait of Hormuz. In other words, this is a crisis involving two energy carriers. In the case of the Ukraine war, the main shortage was crude oil, which was placed under sanctions, and diesel fuel, which drove prices up.
In such a situation, is it also impossible to predict what will happen next?
Yes. As we have seen, prices move up or down with every piece of news. Markets are very emotional and the main concern is how long the crisis will last and whether it will escalate or start to ease. Last week's news that Persian Gulf countries had made efforts to ease the crisis ended with (U.S. President) Donald Trump saying the war would continue until Iran's complete surrender.
When will gasoline prices at filling stations reach €2 per liter?
The easiest way is to look at history. In 2022, during the Ukraine crisis (the start of Russia's full-scale war — ed.), the price of oil was around $120 per barrel and we saw prices of €2 per liter at filling stations then as well. We are moving at roughly the same level now and excise taxes and value-added tax have also increased in the meantime — so €2 is certainly closer.
The price of diesel on the global market is around €1,100 per metric ton. If it rises to about €1,300, then €2 per liter at the pump will be a reality.
Consumers have the impression that prices at filling stations rise very quickly, but fall about twice as slowly if global market prices drop.
Our sector tends to make the news when prices at filling stations go up. However, the reasons behind price movements usually occurred quite some time earlier. That said, the faster increases in recent weeks have also been caused by fears of higher prices, which have led to higher consumption. Estonians have been fueling up more, which means inventories are also lower.
How realistic is the possibility of a fuel supply crisis in Estonia? What conditions would have to be met for that to happen?
Something catastrophic would have to occur. For example, if logistics routes were cut off so that Estonia could not be reached either by rail or by sea. In that case we have strategic reserves that we could use until those logistics channels are restored. For now, Estonians do not need to worry. Seventy percent of Estonia's fuel comes from refineries in Lithuania. I also spoke with the Lithuanian refinery today and they do not import crude oil via the Strait of Hormuz or from the Middle East, so they do not see such a problem arising in Estonia at this time.
So there is fuel, it is just more expensive?
Yes.
--
Editor: Marcus Turovski, Marko Tooming
