Source: French to English Tester Published on: 2026-04-07
Source: The Conversation – France (in French)– By Salomée Ruel, Professor, Léonard de Vinci Pole
Pump prices rise like a rocket, but fall like a feather. A seemingly 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 pair, 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 dollars to euros, then processed in refineries. At the opening of the stock market 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, 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 one’s 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 euros) “before taxes”, to which 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 oil 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 with standards 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 litre over the period studied.
Even before the margin of gas stations, a part of the price reflects marginsupstream, notably the refining margin and the conditions of the wholesale market. They can vary quickly, especially in case of logistical tensions.
Another important point: despite the debates, the net margin of a gas station generally remains low. From 2 euro cents per liter for stations in large retail stores to about 8 euro cents per liter for more expensive stations in the independent network.
Gouv.fr
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 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 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 tax has been stable since 2018.
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The value-added tax (VAT),Down 20% since 2006, which applies to the price excluding tax, but also to the excise. When the product price rises, the VAT increases automatically.
In 2025, all regions,except Corsica, have adopted the maximum increase in the excise rate.
Counterintuitive effects of a tax decrease
On the State side, the main room for maneuver is fiscal. For example, temporarily or permanently modifying the excise tax, and using compensation mechanisms such as universal or targeted “rebates.”
In 2026, the government of Sébastien Lecornu favors a €70 million support plan with“targeted aid”.
Also to read:
How the Iranian revolution caused 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, discounts on pump prices had cost more thaneight billion euros to the State ; in 2023, fuel vouchers nearlybillion.
It is important to note a crucial counterintuitive element: when prices rise, motorists often end up reducing their consumption. However, the excise duty is perceivedper litre. Therefore, 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 question 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 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 appears for several reasons.
Deadlines and stocks
A gas station sells “today” fuel purchased “yesterday.” If the crude oil price drops, the “theoretical” price drops 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 display with every slight market fluctuation, but at specific times (for example, once or twice a day), often by looking at the prices of nearby stations. This adjustment method can make price drops slower, because the station waits for more information (confirmation of the drop) or the “right moment” to align.
Behavior of motorists
When prices soar, consumers compare more, change stations, and competition “activates”: hence the more regular 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 decreases, the tax part remains the same. Logically, the total decrease at the pump is mechanically less spectacular than the variation in oil prices (and therefore, sometimes less visible).
Long-term costs
When geopolitical news becomes tense,notably in the Strait of Hormuz, it is especially the “product parameter” that spirals, then relentlessly passes on to the pumps at service stations. Consequently, motorists see their fuel bills increase inexorably.
To offset these fare 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 rely on the speed of price transmission, with limited profits.
These margins for maneuver exist, but they are rarely immediate, and almost always come with a medium- and long-term cost.
Salomée Ruel does not work, does not advise, does not hold shares, 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 take fuel at the pump, this is what you pay for –https://theconversation.com/when-you-buy-fuel-at-the-pump-this-is-who-you-are-paying-279632