As the war in Ukraine caused panic on energy markets, gas and oil prices have touched new highs this week, with crude oil prices surpassing $110 per barrel for the first time since 2014.
Europe is mostly dependent on Russia for fuel, with 40% of the EU’s natural gas and around 27% of its crude oil imported from the nation.
Moreover, prices of petrol have already risen to over €2 per litre at the pump in many EU countries, pushed up by concerns about the war in Ukraine with Russia and possible sanctions halting the supply.
As per the reports, before the prices of fuel increase further, motorists scramble to fill their vehicles, as the petrol stations in the UK are running out of fuel.
Consumers are reportedly turning to apps to search for the lowest prices at gas filling stations in France.
However, governments are aiming to shield consumers. Hungary declared a price cap on the wholesale price of petrol at €1.30 per litre.
Meanwhile, Simon Coveney, Ireland’s minister of foreign affairs, has called for “exceptional flexibilities” at the EU level to deal with the hike in fuel costs.
Airline business models are susceptible to oil price volatility, and profit margins are likely to shrink as the prices of kerosene rise.
Since the dawn of the COVID-19, airlines have emerged from a historic downturn due to COVID restrictions, the prohibition on entering Russian airspace now force airlines to take longer routes instead of older one, requiring more fuel.
For example- a flight from Frankfurt to Beijing now must have to travel an extra 710 nautical miles to avoid blockaded airspace, and a journey from Helsinki to Tokyo will need to fly an additional 2,137 nautical miles.
It remains to be seen whether the increased operational costs will be passed on to passengers in the form of higher ticket rates, but it is unlikely that the problem will be resolved any time soon.