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Higher oil prices hitting Swedish households

Monday, 30 January 2012
The price of petrol can run up to Skr20 per litre and could even go up more due to the boycott of Iranian oil which could lead leads to a global crisis, according to Swedish experts. But even small increases will be felt in the household economies.

“A doubling in oil prices strikes immediately through the Swedish price of petrol and related products. There will be immediate price spikes,” said Ulf Svahn, CEO of the Swedish Petroleum and Biofuels Institute.

A doubled of the price of crude oil today would mean that fuel will cost more than Skr 5 more per liter. This includes the additional VAT to consumers. The risk is that an oil crisis also brings with it additional increases because the market is upset.

Households will therefore be seing a rise in oil prices primarily to vehicles powered by petrol and diesel where it becomes more expensive to run. The cost of flights to holiday destinations will also increase. Those who still heat their houses with oil will also feel the price increases.

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However, the view is that households can cope for a while with the dramatically higher oil prices. Households have saved substantially in 2011 and also the not so ugly electricity prices this winter was less that expected according to Gunilla Nyström, private economist at SEB bank.

But the high oil prices will on the whole bring in the spill over effect in that, according to Nystrom, with higher oil prices, there will be higher prices overall. Inflation will increase as the purchasing power deteriorates reducing the scope for consumption. A negative economic development can also lead to more may lose their jobs.

Large parts of the Swedish basic industries such as iron and steel mines and forest industry consumes much energy and oil has been a great source of energy. But the situation has changed.
Sweden more is moving away from oil use. Oil price is not an issue that have increased focus on now, according to experts in the Forest Industries sector.

Steel and mines respond in much the same way. A sector which is still totally dependent on oil, however, is the transport sector with all trucks needing that. Probably this is the reason by the Swedish transport sector complained of a dismal future in a recent survey on the how the various industrial sectors seen their future.

“There is a fuel surcharge and the increase can be quite quickly passed on to the customer. It is society that in one way or another will bear the cost,” said Johan Lindstrom, president of the Swedish Road Haulage Companies.
By Scancomark.se Team
           


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