Source: French to English Tester Published on: 2026-04-08
Source: The Conversation – in French– By Salomée Ruel, Professor, Léonard de Vinci Pole
Pump prices rise like a rocket but fall like a feather. An apparently mysterious paradox. In reality, a litre of fuel is the sum of three parameters: the product, namely crude oil which is then refined, the logistics and distribution pair, and especially taxes. Understanding this breakdown clarifies the possible leeway of the State, producers, and distributors.
In the beginning was the product, the “black gold.” The fuel comes from crude oil, often indexed tothe price of Brent, converted from the dollar to the euro, then processed in refineries. At the opening of the stock exchange on February 15, 2026, the price of aBrent barrelwas 68.54 dollars (59.77 euros), 100.88 dollars (87.98 euros) on March 24, 2026, and 106.6 dollars (92.97 euros) on March 30, 2026.
Roole
Logically, when the price of a barrel ofBrentincreases (or when the euro falls), the cost of raw materials in the final price of fuel also increases. Conversely, if the price of crude oil decreases, the cost of raw materials mechanically decreases, but not always instantly! Indeed, there are delays related to stocks or supply chains.
A rough estimate helps to get your bearings: a barrel of Brent contains 159 liters. An additional ten-dollar variation per barrel (8.69 euros) raises the price of a liter of gasoline by 6 US cents (0.052 euro) “before taxes,” to which are added the effects ofexchange rateand refining.
Boursorama
From the oil depot to the gas station
Another part of the price concerns the transportation, storage, and sale of fuel from petroleum depots to gas stations.
These logistical costs increase year after year due to theinflation – 5.2% in 2022 and 0.9% in 2025. Higher wages or compliance updates will have consequences on fuel prices. According to theInsee, since 2022, transport-distribution costs have increased “more moderately” than crude oil and refining, but still by about +9 euro cents per liter over the studied period.
Even before the margin of gas stations, part of the price reflects marginsupstream, in particular the refining margin and the conditions of the wholesale market. They can change quickly, especially in cases of logistical tensions.
Another important point: despite the debates, the net margin of a service station generally remains low. From 2 euro cents per liter for stations in large retailers to about 8 euro cents per liter for more expensive stations in the independent network.
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State Taxes
Thetaxes, set by the State and supplemented by the regions, are the most visible part of the price of a liter of fuel. They represent between 50% and60 %of the final price, depending on the type of fuel and the barrel level. Result: when the price of crude oil varies, only part of the pump price can adjust, the rest being tax-related and therefore relativelyrigid.
Two elements must be taken into account:
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The excise duty (formerly the domestic consumption tax on energy products, or TICPE), which represents 36% of the pump price of diesel and 39% of that of unleaded petrol (SP95). The fixed amount per liter (in2026, excluding regional surcharges, is 68.29 euro cents per litre for gasoline and 59.40 euro cents per litre for diesel. The national excise has been stable since 2018.
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The value-added tax (VAT),At 20% since 2006, which applies to the price excluding tax, but also to the excise duty. When the product price rises, the VAT increases automatically.
In 2025, all regions,except Corsica, have adopted the maximum increase of the excise rate.
Counterintuitive effects of a tax decrease
On the side of the State, the main room for maneuver is fiscal. For example, temporarily or permanently modifying the excise duty, and playing with compensation mechanisms such as universal or targeted “rebates.”
In 2026, the government of Sébastien Lecornu favors a support plan of 70 million euros with“targeted aid”.
Also to read:
How the Iranian revolution triggered the second oil shock of 1979
Any tax cut has a very significant budgetary cost, as the excise duty on fuels remains a major source of revenue. In 2022, the discounts on pump prices had cost more thaneight billion euros to the StateIn 2023, fuel vouchers nearlybillion.
It is important to note an essential counterintuitive element: when prices increase, motorists often end up reducing their consumption. Moreover, the excise tax is perceivedper litre. Consequently, if volumes decrease, excise revenues also decrease, which can cancel out (or even reverse) the VAT gain linked to a higher price.
(Low) margins of distributors
40 million motorists,CC BY-NC
On the distributors’ side, service stations, such as Shell, Avia, TotalEnergies, Carrefour, Leclerc, or Esso, can adjust their margins. For a highly competitive product like fuel, it is only a matter of a few cents.
That is why the National Automobile Federation and the association 40 Million Motorists (opposed to urban speed cameras and bike lanes in Paris after the lockdown) launched on March 19, 2026“the ‘transparency operation'”. The issue: to display at their checkout the exact breakdown of the price of one liter of fuel.
“Rockets and Feathers”
“Prices rise like a rocket, but fall like a feather.” In economics, this phenomenon is known asRockets and Feathers.A studyon the British market highlights that retail prices adjust more quickly when costs rise than when they fall. Aanother study, in the United States, confirms this contradiction.
Roole,CC BY-NC
This asymmetry appears for several reasons.
Deadlines and stocks
A station sells “today” fuel purchased “yesterday.” If the crude price drops, the “theoretical” price drops immediately, but the fuel in the tank was paid for at the previous cost.
On the other hand, when costs rise, the risk of selling at a loss makes the adjustment faster. Because selling at a loss isa prohibited commercial practice.
Also to read:
Why the strikes on Iran remind us that it is urgent to abandon oil
Adjustment and coordination costs
In many distribution networks, prices are changed “in batches” rather than continuously. Stations do not revise their displays for every minor market fluctuation, but at specific times (for example, once or twice a day), often by looking at the prices of neighboring stations. This adjustment method can make decreases slower, because the station waits for more information (confirmation of the drop) or the “right moment” to align.
Behavior of drivers
When prices soar, consumers compare more, switch stations, and competition “activates”: hence more frequent price updates. When prices fall, competitive pressure is generally less intense. The decrease then spreads more slowly.
“Rigid” taxes
The presence of a fixed excise tax, or “rigidifies,” the price. When the product price decreases, the tax portion remains the same. Logically, the total decrease at the pump is mechanically less dramatic than the variation in oil prices (and therefore, sometimes less noticeable).
Long-term costs
When geopolitical news becomes tense,notably in the Strait of Hormuz, it is above all the “product parameter” that heats up, then relentlessly transmits itself to the pumps at gas stations. Consequently, motorists see their fuel bills increase inexorably.
To offset these price increases, the State has a real leverviataxes (VAT and excise duty), but it is politically sensitive and costly for public finances.
Theoil producers, like Canada, Saudi Arabia or Kazakhstan, influence upstreamviathe production level and the price of a barrel of crude oil (Brent). Retailers mainly play on the speed of price transmission, with limited profits.
These leeway margins exist, but they are rarely immediate, and almost always come with a medium and long term cost.
Salomée Ruel does not work for, does not advise, does not hold shares in, and does not receive funds from any organization that could benefit from this article, and has declared no affiliation other than her research organization.
–ref. Why the price of gasoline at the pump does not fall as quickly as it rises –https://theconversation.com/why-the-price-of-gasoline-at-the-pump-does-not-fall-as-fast-as-it-rises-279632