Fuel prices: diesel on the verge of an all-time high. Variable excise duties possible in August
Diesel at 2.141 euros per litre, 1.3 cents below the weekly high of 14 March 2022. Further price cuts will only come after the VAT windfall in July
Key points
The latest surge in fuel prices is outpacing the pace at which economic policy can respond. But also for timing reasons, diesel – now just a stone’s throw from the all-time highs reached in March 2022 – promises to reignite the political debate, on the eve of August, which is traditionally the holiday month in Italia. But the tools of public finance have been blunted: both at national and EU level.
Share prices at record highs
In yesterday’s figures, the Ministry of Enterprise reported an average diesel price at the pump of 2.141 euros per litre. The most comprehensive publicly available time series are those from the Ministry of the Environment, which records weekly averages every Monday: the highest figure is recorded for 14 March 2022, just over two weeks after Russian tanks entered Ukraine: 2.154 euros per litre, 1.3 cents higher than yesterday’s figures.
That week, on 15 March, diesel prices soared to 2.231 euros per litre , almost 8 cents above yesterday’s levels. And it is precisely up to 8 cents that the forecast increase put forward by Unem president Gianni Murano is based on the dynamics of price of oil. However, yesterday the price took another leap, once again breaking through the $100 per barrel mark, which it had fallen below in May.
The previous (different) one
Three days after that summit, on 18 March 2022, the Draghi government introduced the first cut of 25 cents in excise duty per litre plus 6.5 cents in VAT, which was then extended, through a series of extensions, to cover the whole year (in a reduced form, including under the Meloni government which took office on 22 October) at a cost of 7 billion euros. However, with the exception of the price of diesel – which rose by 25.7 cents per litre this month, compared with a 15.1-cent increase for petrol – the current situation is not comparable to that of the time.
In 2022, inflation soared to 8.1 per cent, boosting VAT revenue in a public budget which – no longer having to comply with the Stability Pact, which had been suspended due to the pandemic – ended the year with a deficit of 8 per cent of GDP, a reduction of one percentage point compared with 2020. Today, the government, still struggling to exit the excessive deficit procedure, has already allocated almost 2 billion to reduce fuel prices from 18 March to 3 July, before hopes of a de-escalation in the Strait of Hormuz and the surrounding area were dashed by the return of a crisis that has now doubled in Suez.
