The sharp increase in oil and the uncertainty unleashed by the US and Israeli war against Iran, which has blocked the strategic Strait of Ormaz in retaliation, have forced the different governments of Europa to promote measures to counteract the escalation in prices of crude oil and energy derivatives.
These are some of the recipes that are being considered or are already being applied in France, Italy, Germany and the United Kingdom:
Given the increase in fuel prices since the start of the war in the Middle East, the Government of France recently announced “immediate measures to alleviate the liquidity” of the fishing and transport companiesbut without announcing direct reductions in fuel prices. In addition, it called on refineries to evaluate, as soon as possible, the capacity of their plants in France to quickly and temporarily increase production of their products, with the aim of relieving tension in European markets, even allowing some, such as Gravenchon, to increase their capacity.
However, some associations such as the National Association of Producer Organizations (ANOP) or the Union of French Fishing Vessel Owners (UAPF) denounced these “half-measures” and demanded direct actions “in accordance with the situation.” In response, this Thursday the Minister of Economy, Roland Lescureconfirmed that the Government will announce new provisions that will especially affect the long distance drivers. “The short-term problem is being able to pay the bills. It is, therefore, a liquidity problem,” declared the minister, insisting that “only specific measures will work.” It is expected that next Monday, the French Prime Minister will chair a new G7 meeting with the heads of Finance, Energy and the governors of the central banks, to evaluate a new package of measures in the face of the explosion in prices.
In Italy, already on March 18, the Government of Giorgia Meloni gave the green light to a decree-law to contain the rise in fuel prices after the new crisis in the Middle East. The text was prepared by the Council of Ministers and published in the Official State Gazette. The main measure is a discount of 20 cents per liter in it excise tax on gasoline and diesel for 20 days, from March 19 to April 8. This tax is one of the elements that make up the final price of fuel, along with the cost of raw materials and VAT. This is a fixed indirect tax that taxes certain goods—such as electricity or tobacco—at the time of their production or consumption.
In addition to the tax reduction, the decree provides aid to the road transport sector. Companies will receive a extraordinary tax credit to compensate for the rise in diesel prices. This subsidy can be used to pay taxes until the end of 2026, will not be counted as income and will be compatible with other aid within certain limits.
The decree also incorporates measures to stop the speculation. For three months, until June 19, oil companies must communicate the recommended prices to gas stations daily, publish them on their websites and notify the control authorities. Failure to comply will result in penalties of 0.1% of daily turnover. Furthermore, once set, prices cannot be increased throughout the same day. The ministry and the supervisory body have warned that they will monitor possible deviations between prices at the pump and international quotes. If anomalous increases are detected, the Finance Guard may inspect the entire chain and, where appropriate, impose sanctions or transfer the file to justice.
The price of gasoline can only be raised once a day, at 12:00 noon, although if it is to be lowered it can be done at any time: this is the instrument with which the Government of Friedrich Merz wants stabilize fuel prices. It is called “Austrian model” because it is the formula similar to that implemented in the neighboring country. And it has been activated by fast track to stop sudden escalations during the Easter holidays. This Thursday it was approved by the Bundestag (Lower House) and which will be submitted on Friday for ratification by the Bunderat (Upper House). They are also considered fines of up to 100,000 euros to violators, as well as strong sanctions against excessive increases or that do not respond “to the objective reality” of the market, according to the Minister of Economy, Katharina Reiche.
Whether this instrument will be able to contain the price of fuel is a controversial issue not only for the two extremes of the parliamentary opposition, the extreme right. Alternative for Germany (AfD) y The left. Some experts also question its effectiveness. But Merz’s coalition between conservatives and social democrats hopes, at least, to avoid the tension that is currently generated by the daily task of going to the gas station that offers the cheapest fuel, which can change from hour to hour.
The Merz government is also considering temporarily increasing the possibilities of tax relief when traveling to work. Currently, 38 cents per kilometer are deducted, even on short trips and regardless of whether the trip is made by car, bicycle, public transport or on foot.
The Government of United Kingdom has announced a £53m aid package (about 61 million euros) for households that continue to use heating with dieselmost of them in Northern Irelandwhich are being the most affected by the increase in oil prices.
The Executive has also given instructions to the Competition and Markets Authority (CMA) to monitor energy companies and detect possible unjustified price increasesin addition to force gas stations to report changes in rates and to implement a seeker to locate those where fuel is offered cheaper.
These measures are added to the reduction in fuel taxequivalent to five pence per liter, approved in 2022 by the then Conservative Government and which Labor has maintained at least until next September. The Executive also announced last November a drop of almost 7% in the maximum price of electricitya measure that will be in force between April and July and will mean an average saving of 117 pounds per year for households.
The Minister of Economy, Rachel Reeveshas avoided clarifying whether it will maintain these measures when they come to an end in the coming months, something that will be decided depending on how the conflict in the Middle East evolves, but has warned that the possible aid will go to the most vulnerable population and not to the entire citizenry.
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