Rhine Drought Triggers Fuel Price Spikes in Western Germany
Fuel prices in western Germany are surging due to the logistical impact of the drought on the Rhine, with regions along the river seeing the sharpest increases at the pump.
The General German Automobile Club (ADAC) reported this week that diesel prices rose to a high of €2.25/liter ($2.62/liter) in the western state of North Rhine-Westphalia. This is the country’s most populous state, with cities such as Cologne, Dusseldorf and Dortmund.
Rhineland-Palatinate, just to the south of North Rhine-Westphalia, ranks second with a diesel price of €2.24/liter.
Inland shipping via the Rhine is essential for the delivery of supplies of refined oil products to western Germany, as well as to parts of France and Switzerland. Fuel cargoes are loaded at the Amsterdam-Rotterdam-Antwerp (ARA) oil refining, storage and trading hub before being shipped in barges upstream.
This summer’s drought has caused water levels to drop significantly in the Rhine. This limits the tonnage that each barge can carry, resulting in higher freight costs and lower barge availability. A trip from Rotterdam to Karlsruhe in Baden-Württemberg was pegged at €200/metric ton on Friday, up from €31/mt in mid-June, according to barge brokers.
To be sure, the increase in German fuel prices at the pump is not only driven by the water levels in the Rhine. Global fuel prices have surged this summer in response to the ongoing closure of the Strait of Hormuz and Russia’s fuel export ban. OPIS assessed FOB diesel barges in ARA at $1,352/mt on Thursday, more than double $671/mt a year ago.
However, ADAC notes that, within Germany, those regions reliant on the Rhine are seeing relatively sharper increases at the pump. Conversely, retail diesel prices were reported at €2.17/liter in the eastern estates of Bavaria and Berlin. Bavaria benefits from access to supplies from the Transalpine Pipeline, while prices in Berlin are pressured down by a high density of gas stations, ADAC said.
— Reporting by Jaime Llinares Taboada, jllinares@opisnet.com
–Editing by Yazdi Merchant, ymerchant@opisnet.com