Source: French to English Tester Published on: 2026-04-07
Source: The Conversation – in French– By Salomée Ruel, Professor, Pôle Léonard de Vinci
Pump prices rise like a rocket, but fall like a feather. An apparently mysterious paradox. In reality, a liter of fuel is the sum of three parameters: the product, namely crude oil which is then refined, the logistics and distribution duo, and especially taxes. Understanding this breakdown clarifies the possible room for maneuver 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 stock market opening, on February 15, 2026, the price of abarrel of Brentwas 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 fuel price also increases. Conversely, if the price of crude oil decreases, mechanically the cost of raw materials 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 dollars per barrel (8.69 euros) increases the price of a liter of gasoline by 6 cents of a dollar (0.052 euro cent) “before taxes,” to which are added the effects ofexchange rateand refining.
Boursorama
From the oil depot to the service station
Another part of the price concerns the transport, storage, and sale of fuel from oil depots to service stations.
These logistical costs increase year after year due to theinflation– 5.2% in 2022 and 0.9% in 2025. Higher wages or compliance costs will have consequences on the price of fuel. 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 study period.
Even before the petrol stations’ margin, a part of the price reflects marginsupstream, notably the refining margin and the wholesale market conditions. These can vary quickly, especially in the event of logistical tensions.
Another important point: despite the debates, the net margin of a service station usually remains low. From 2 euro cents per liter for stations in large retail chains 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 crude price varies, only a part of the pump price can adjust, the rest being fiscal 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 gasoline (SP95). The fixed amount per liter (in2026, excluding regional surcharges, is 68.29 euro cents per liter for gasoline and 59.40 euro cents per liter for diesel. The national excise duty has been stable since 2018.
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The Value Added Tax (VAT),Down 20% since 2006, which applies to the pre-tax price, but also to the excise duty. When the product price goes up, the VAT increases automatically.
In 2025, all regions,except Corsica, adopted the maximum increase of the excise rate.
Counterintuitive effects of a tax decrease
On the State side, the main leeway is fiscal. For example, temporarily or permanently modifying the excise duty, and using compensation mechanisms such as universal or targeted “discounts.”
In 2026, the government of Sébastien Lecornu favors a support plan of 70 million euros with some“targeted aid”.
Also read:
How the Iranian revolution led to the second oil shock of 1979
Any tax reduction 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 StateÂ; in 2023, fuel vouchers nearly…billion.
An essential counterintuitive point to note: when prices rise, motorists often end up reducing their consumption. However, the excise duty 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 distributor side, service stations such as Shell, Avia, TotalEnergies, Carrefour, Leclerc, or Esso can adjust their margins. On a highly competitive product like fuel, it is only a matter of a few cents.
That is why the National Federation of Automobile 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: displaying at their checkout the precise 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 emphasizes 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 arises for several reasons.
Delays and stocks
A station sells “today” fuel purchased “yesterday.” If the crude oil price drops, the “theoretical” price decreases immediately, but the fuel in the tank was paid for at the old cost.
Conversely, 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 waves” rather than continuously. Stations do not update their displays with every micro-variation of the market, but at specific times (for example, once or twice a day), often by looking at the prices of neighboring stations. This mode of adjustment can make decreases slower because the station waits for more information (confirmation of the decrease) or the “right moment” to align.
Behavior of motorists
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 duty “rigidifies” the price. When the product price drops, the tax amount 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 especially the “product parameter” that goes haywire, then relentlessly transmits to the pumps at gas stations. Consequently, motorists see their fuel bills increase inexorably.
To offset these tariff 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 the upstreamviathe production level and the price of a barrel of crude oil (Brent). Retailers mainly rely on the speed of price pass-through, with limited profits.
These leeway margins exist, but they are rarely immediate, and almost always come with a medium-term and long-term cost.
Salomée Ruel does not work for, does not advise, does not hold shares in, does not receive funds from any organization that could benefit from this article, and has declared no other affiliation than her research organization.
–ref. When you buy fuel, here is what you pay –https://theconversation.com/when-you-buy-fuel-here-is-what-you-pay-279632