“ERSE study confirms the smooth functioning of the fuel market”

A Association of Portuguese Fuel and Lubricant Companies (EPCOL) considers that the study by the Regulator of Energy Services (ERSE) on fuels in Portugal confirms the “good functioning of the market”. 

“The analysis of ERSE concludes that the evolution of fuel prices was mainly determined by international supply costs and taxation and no irregularities or relevant malfunctions in price formation were identified“, EPCOL, in a statement sent to the essays, is advancing. 

It adds that “in the overall market assessment, ERSE concludes that the main indicators of competition, including retail concentration, diversity of supply and the relationship between national prices and international quotations, reveal no structural changes or signs of sector malfunction. Only concentration in the wholesale market justifies continued monitoring”.

Therefore, EPCOL explains, “the ERSE concludes that there is no evidence of widespread abnormal behavior, nor grounds for imposing maximum margins on the commercialization of fuels“.

“ The study thus reinforces the conclusion already reached by previous analyses: the Portuguese market for road fuels has been operating in a competitive manner and aligned with the economic factors that determine the evolution of prices,” EPCOL said.

ERSE leaves several recommendations to the Government

The ERSE recommends that the government strengthen transparency and supervision in the fuel market, but rejects the need to intervene administratively in the prices charged.

“ The proposals put forward by ERSE to the Government seek to strengthen transparency and supervision, not to control prices administratively, because there are no reasons for such intervention in prices, read in the “in-depth study” on the evolution of road fuel prices in mainland Portugal, requested by the regulator by the Minister for Environment and Energy and published on Thursday evening.

Among the concrete measures identified in the study are the need to “harmonize public benchmarks on prices and reduce the risk of incorrect interpretations between the efficient price of ERSE and the reference price disclosed by ENSE [National Entity for the Energy Sector]”.

ERSE further recommends that the Government periodically review the discounted price methodology with the Directorate-General for Energy and Geology (DGEG), including the discounts covered and the weightings used.

The “clear and timely” definition of annual biofuel targets is another of the proposed measures to prevent “different levels of incorporation from creating cost advantages and market distortions that do not result in greater efficiency”.

In addition, the regulatory body advocates an extension of ERSE’s sanctioning powers to the National Petroleum System, concerning the obligations covered by economic regulation and supervision, to ensure “the protection of all consumers in a harmonious manner regardless of the energy vector used”.