Oil companies have ruled out a possible increase in fuel prices in the coming weeks, with the expectation that prices will now begin to fall. The Government also admitted a price reduction. Tax relief on the way?
This Monday, at the entrance to the Eurogroup meeting in Brussels, the Portuguese Finance Minister said he expected a reduction in fuel prices which, this Monday, registered the same as in the last three years.
Joaquim Miranda Sarmento guaranteed monitoring “in the coming weeks” for the Government to decide whether to move forward with support such as tax relief.
Speaking to Lusa, the general secretary of the association that represents oil companies in Portugal, EPCOL, does not believe that there will be a further rise in fuel prices, but argues that the immediate relief on the bill will only have an impact through the fiscal component.
“We consider that any measures to alleviate increases that may be considered excessive are welcomed by the entire sector and, particularly, by consumers, who pay the bill,” he said Antonio Compridowhen asked to comment on today’s statements by the Minister of Finance.
“Prices will start to fall”
With regard to the recent significant increase in fuel prices, which this Monday led to an increase, on average, of three cents in gasoline and five and a half cents in diesel, Antonio Comprido believes that there will be no reason to “continue nor is there any reasons to admit that there will be an escalation in prices”.
“Looking at the evolution of prices, and apart from some fluctuations that are natural, there was a progressive drop from April last year until the end of 2024. It is natural that after a period that was quite long of falls, there is a recovery”, maintained.
The correction in oil prices is explained by greater energy consumption in the wintermainly diesel due to the cold, the new sanctions imposed on Russia as well as the Organization of Petroleum Exporting Countries (OPEC) have postponed the restoration of normal production values.
“All these factors will be responsible for this increase, which was more significant this week”, said the head of EPCOL, adding that the future evolution of oil prices will also depend on the evolution of these points, and is therefore difficult to predict. .
“We don’t know whether in a week or two, or tomorrow, the prices will start to fall”, highlighted the person in charge.
“Now we may see a period that could be more or less long of increases, but not with increases of five cents as happened in diesel and three cents in gasoline, over several weeks in a row. We don’t think there are objective reasons for this. But I could be wrong”, he warned, reinforcing that the evolution of prices in international markets is difficult to predict.
Tax relief on the way?
Returning to “tax burden”the EPCOL representative has no doubt that consumers would applaud if the Government decided to “change the only dimension it can to alleviate prices, which is the tax burden” – which, according to the association, weighs 50% of the invoice.
However, he recalled, the executive may face difficulties with Brussels.
“The European Commission has been very insistent on ending the support that was given at the time of the price rise [2022]. But this is a political problem that the Government will have to resolve”, he pointed out, arguing that on the oil companies’ side there is no room to reduce profit margins.
“We have a policy that is very typical of the Portuguese market, which [assenta em] discounts. Practically everyone who supplies fuel has a discount through any means and companies also play with these margins to be able to offer these discounts. Therefore, it does not seem to me that, in addition, there is much room to make additional reductions in prices or to absorb increases in the price of raw materials”, he assured.
The European Commission has demanded that Portugal withdraw support adopted due to the 2022 energy crisis, particularly with regard to the Tax on Petroleum and Energy Products [ISP].
However, this Monday, Mirando Sarmento said that if it is necessary to move forward with this new aid, the executive will “also work with the European Commission, once again explaining the exceptionality of a situation like this”
