Energy
Business 07/04/2022

20-cent subsidy drives down fuel prices 10% in one week

Fuel will still be the most expensive ever over Easter holidays

2 min
A gas station with the panel reflecting the high prices.

BarcelonaThe price of fuel fell by more than 10% last week in Spain, according to data from the European Union Oil Bulletin published this Thursday, which reflect average prices at service stations throughout the State. The bulletin states the price of 95-octane gasoline stood at €1.61/litre, 11.2% less than last week's €1.81, while the price of automotive diesel was €1.54 per litre, 10% less than the €1.83 of the last week of March.

For the second week in a row diesel was at a higher price than gasoline; usually, the higher price of diesel on international markets is offset by lower fuel tax. Thus, without taxes, the price of diesel in Spain was €0.98 per liter, while the price of gasoline was €0.86 per liter.

Price of fuel in Spain
Price per litre, weekly data

The drop in prices coincides with the measure adopted by the Spanish government to subsidise fuel with 20 cents per litre, of which the State contributes 15 cents and oil companies 5 cents. This discount is already reflected in fuel prices, which are at their lowest level since February. Thus, filling the tank is about €11 cheaper than a week ago.

Despite this drop in prices, this will be the most expensive Easter ever to fill up the tank, at a time when a significant increase in travel is expected after two years marked by the impact of the pandemic. In fact, the price of petrol is 22% higher than in Easter 2020 and 2019 (before the pandemic), while in the case of diesel it will be 33% more expensive than last Easter and 38% higher than in 2019. Filling a 55-litre tank of petrol now costs almost €89, €16 more than last year. In the case of diesel, filling the tank costs more than €90, about €25 more than a year ago.

Subsidy contested in court

The 20-cent per litre subsidy on fuel has been controversial. In fact, the largest petrol station employers' association, the Spanish Confederation of Service Station Entrepreneurs (CEEES), which groups together some 4,000 members, unanimously agreed to appeal against the Spanish government's decree. This employers' association indicates that, although it shares the goal of Chapter VI of the regulation (reducing the impact of fuel prices on families and companies), it "cannot agree with the way in which this measure has been designed and implemented".

The employers' association considers that its requests for dialogue with the administration have not been met and, therefore, "leaves them no other option but to go to court". The association has stressed that the advances, "which are no longer such", have not reached all those who have sought to apply for them and on some occasions there have been "clamorous" mistakes in the quantities paid. The resulting legal uncertainty is such that entrepreneurs still do not know how the monthly settlements will work.

The Spanish government, however, defended the measure again on Thursday. The Minister for Ecological Transition, Teresa Ribera, in an interview with Efe, claimed that the measure "is working normally" thanks to the efforts of the administration and private operators in the sector. She has even indicated that in France, where a similar measure was implemented, it has taken much longer to apply it. On the other hand, the Minister of Finance, María Jesús Montero, told journalists on Thursday that advances have already been paid to more than 4,050 petrol stations, which make up 90% of those that have requested it.

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