Did fuel get (much) cheaper? We did the math

Athe predictions of the Automobile Club of Portugal brought, on Friday, good news for Portuguese drivers. The information was that both the price of diesel and gasoline would be substantially cheaper. But is this already reflected in the fuel prices?

According to data from the Directorate-General for Energy and Geology (DGEG), the average price of simple diesel fell from EUR 1,855 per litre to EUR 1,779 per litre, while simple petrol 95 dropped from EUR 1,918 per litre to EUR 1,882 per litre between Friday and Monday.

So simple diesel will have dropped about 8 cents a litre, while gasoline has become 4 cents cheaper.

Fuels are thus effectively cheaper, although the decline was not, on average, as sharp as the announced.

Government reduces discount on ISP for diesel and gasoline

Fuels could be even cheaper if it were not for the government to have decided to reduce the discount on the ISP this week, by 1.8 cents per litre for diesel fuel and by 1 cent for gasoline, according to a ordinance, published on Friday in Diário da República.

“ Given the prospect that next week there will be a fall in the prices of road diesel and unleaded petrol, the government decided to adjust the extraordinary and temporary discount on the Petrol and Energy Tax (ISP) in force for road diesel and unleaded petrol,” the Executive of Luís Montenegro announced in a statement.

Therefore, “the discounts resulting from the application of this temporary and extraordinary mechanism at the rate of the ISP applicable on the continent to road diesel and unleaded petrol are EUR 24,86 and EUR 31,21 per 1000 litres respectively”, he explained.

According to the ordinance, “in view of the extraordinary increase in fuel prices due to the impact of the geopolitical and military crisis in the Middle East on oil prices and its derivatives” and the uncertainty, “with a consequent social and economic impact on families and businesses, it has been decided to make a temporary and extraordinary discount of the ISP”, when the price increase exceeds, compared to the week of 2 to 6 March, a value of 10 cents.

In practice, it corresponds “to the return of additional VAT tax revenue through a temporary reduction in the ISP unit rates applicable on the continent to unleaded petrol and road diesel”, he recalled.

The fall in prices this week takes place in a context of less pressure on international markets, after the relief of geopolitical tension in the Middle East.