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What’s happening to pump prices? A service station chain CEO explains

St1 chain CEO Mika Wiljanen tells Yle that the price of crude oil is far from the only factor in pump pricing.

Tankkauspiste St1-huoltoasemalla Lahdessa.
In addition to world crude oil prices, pump prices paid by consumers is impacted by local competition. Image: Lauri Rautavuori / Yle

A sudden plunge in crude oil prices on international markets this week has aroused expectations among motorists of significantly lower costs at pumps when tanking up.

Mika Wiljanen, the CEO of Finland's ST1 service station chain, says that prices will come down, but not just yet.

"If the current trend continues, then indeed we'll see a fall, with a slight delay," Wiljanen told Yle.

How much do you expect to see prices at service stations for petrol and diesel fuel to decline?

"It's good to remember here that the final cost is affected by a lot of factors. One major factor is our fuel taxes, with VAT on top of that. The proportion that crude oil accounts for is smaller. In that respect, there won't be any huge changes on the way, but certainly within a few days, a week or two, some impact will be seen."

Why do prices go down slowly, but always go up quickly?

"This is largely [price] movement caused by local competition. Where competition for customers is tough sometimes the price level falls to such a low level that one has to react. Then the competition continues and prices come down more slowly. That's probably the reason for the phenomenon."

The demand for petrol often rises during the summer months, which pushes up prices. Will that happen this coming summer?

"In the present situation, that is extremely difficult predict because total world demand will have a strong influence. If demand remains thin and there is no upsurge, then it is unlikely that it will bring about a summer price spike."

What is most crucial right now for pump prices?

"The key thing is what kind of common agreement the big oil producing countries come to, because the question is at what level prices strike a balance."

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