High oil prices alarm Ticino's citizens

"We're on a roller coaster. I've never seen anything like this." Paolo Righetti, president of Swissoil Ticino, describes the current situation of the oil derivatives markets with a very familiar image.

Prices rise and fall at impressive speed. A roller coaster, in fact. The difference is that the tracks on which the carriages run do not display any solidity or offer any certainty. Instead, they reveal their fragility in full.

People have been discussing the sky-high gas prices for weeks. But as well as filling up cars, the cost of boilers is starting to become scary. Heating oil is likely to weigh very heavily on upcoming family budgets. In fact, the heating bill for 60% of the canton's buildings is set to double.

Figures explain more than words. At the weekly closing on Friday, 100 liters of heating fuel would have cost 150.68 francs. On December 30, 2020, 16 months ago, the price was steady at 70.40 francs. On March 9 of this year, after two weeks of war in Ukraine and with the world still stunned in response to the arrogance of Vladimir Putin, buying 100 liters of fuel oil required 193.16 francs. These fluctuations are frightening, and have completely destabilized the habits of those who buy and, obviously, those who sell.

The fever chart of Glauserian memory comes to mind. Spikes as unpredictable as they are sudden from one side to the other of the vertical axis. A seismograph would probably not be sufficient to draw them.

"In the last week - Righetti reported in CdT - diesel prices have undergone enormous shocks each day: minus 61 dollars per metric ton on Monday, plus 57 on Tuesday, plus 33 on Wednesday, plus 18 on Thursday, plus 34 on Friday. I enter the office in the morning with one figure and leave in the evening with another, and sometimes the difference is 100 dollars a tonne". If a customer requests a product, Righetti calls the supplier in turn and only afterwards fixes the sale price, which, he says, "can change three or four times in one day".

Predictions and prophecies

Presently, Righetti confirms, practically nobody buys. "We advise people not to, or to purchase the minimum necessary - the president of Swissoil Ticino says - Prices are still too high."

Just to give an order of size: for an average house, which consumes 4 thousand liters a year of diesel fuel, it would take 6,030 francs today, against 2,815 15 months ago.

The point is that making forecasts is impossible. Basically, a gamble. "A crescendo similar to that of the last 2-3 months, there has never been - says to Corriere del Ticino Martin Stucky, head of the information center for fuel oil of Avenergy, an association representing the interests of oil importers in Switzerland - the numbers of the trend in fuel oil prices are incredible, we can simply talk about impressive numbers." Each hypothesis resembles a prophecy. "To those who have sufficient reserves I suggest to wait - says Stucky - To the others I suggest to buy only the useful quantity for the summer. We cannot know what the future holds, we must wait and carefully observe the market. Two years ago, at the height of COVID, prices were very low and many people filled their tanks. Now the situation has completely reversed. But the frenzy doesn't help. It's coming into the summer season, we don't have to, at the moment, order at this price."

The uncertainty of war

Indeed, as Blick wrote last week, "orders from the Swiss households are at a very low level, even declining." This is confirmed by large fuel retailers "such as Agrola and Oel-Hauser. Many homeowners are waiting. Others buy very partial quantities." The same Swiss-German suppliers, however, contrary to their Ticino colleagues, advise to "fill up the tanks, at least partially, so as not to be surprised by another price explosion", but also not to get stuck in the inevitable "bottlenecks" of deliveries, destined to form if everybody buys at the last moment and to "last a few weeks, or even two or three months in autumn". A situation, in any case, which is not new, Blick emphasized: "large volumes of orders are nothing new for suppliers. Last autumn, in fact, families stocked up before the CO₂ tax was increased".

In the background there remains, of course, the war. With all its tragic burden of death and uncertainty. Energy prices are strongly linked: if gas rises, oil usually does too. And vice versa. Putin's threats and the announcements of European embargoes do not help. On the contrary, they create further instability. Which no one is able to dominate.