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Central government wants to raise excise duty on diesel fuel by more than 9 cents per litre as of 1 April so that the price of diesel would be brought into line with that of petrol. According to the amendment tabled by PSOE - the party in government - and agreed with other parliamentary groups, the general tax rate on diesel fuel will rise from 0.307 euros per litre to 0.40069 euros. In this way, the tax diesel fuel for cars will pay a total of 0.47269 euros per litre (0.40069 euros general rate and 0.072 euros special rate), the same as petrol, instead of the current 0.379 euros per litre (0.307 euros general rate and 0.072 euros special rate).
If this increase, included in the package of amendments to the bill that will impose a minimum tax of 15% on large multinationals, is approved, it will eliminate as of 1 April 2025 the rebate that diesel had over petrol, but it will not affect diesel for commercial vehicles. The government stated that the measure is of an environmental nature and follows the recommendations of the European Commission to increase environmental taxes. "It makes no environmental or health sense to incentivise or subsidise diesel over petrol," said a Treasury spokesperson.
The party has justified the tax hike on diesel, which is on a par with the most popular variety of petrol consumed (below 98 octane), because "such a move embodies the environmental costs caused by these fuels and, as far as possible, contributes to moderating greenhouse gas emissions."
However, the amendment does have a caveat: if diesel prices rise steadily such that, for two consecutive months, they exceed two euros per litre and the average Brent crude oil price rises in that second month above the average for the previous month, then a mechanism for reducing the taxation of diesel will be applied. From the first day after these two months, the general rate will be 350 euros per thousand litres.
On the other hand, fuel prices in Spain have this week experienced their third consecutive rise per week, after leaving behind a downward trend of three months of price drops since mid-July, climbing to new highs since the beginning of September. The average price of a litre of petrol this week stood at 1.507 euros, up 0.13% from last week's 1.505 euros, according to data from the European Union Oil Bulletin. At the same time, the average price of a litre of diesel was 1.3925 euros this week, up slightly (+0.028) from a week ago.
Fuel prices have fallen by 8.9% in the case of petrol and 9.2% for diesel since they began a downward spiral in July of this year, coinciding with the summer holiday period when there are usually more road journeys than any other time of the year.
The average price of both fuels closed last year at their lowest levels for the year, with a reduction of almost 15% in the case of petrol and more than 13% for diesel.
Despite this new weekly increase, filling an average 55-litre diesel tank at current prices costs around 76.6 euros, some 14.37 euros less than at the same time last year, when it was around 90.97 euros. For petrol vehicles, filling up an average tank (55 litres) currently costs around 82.88 euros, some 8.53 euros less than in the same week in October 2023 when the price was 91.41 euros.
Moreover, the average price per litre of diesel, despite the rebound, remains below the levels it was at before the outbreak of the Russian invasion of Ukraine, which began on 24 February 2022, when it was at 1.479 euros per litre. Petrol, too, remains well below, as it was priced at 1.591 per litre at that time.
Likewise, both fuels are still far from the highs recorded in the summer of 2022, particularly in July when petrol reached 2.141 euros and diesel 2.1 euros.
Diesel has now been below the price of petrol for 87 weeks. This remains the same as before the Russian invasion of Ukraine, which caused the price of diesel to be more expensive than petrol continuously from August 2022 until mid-February 2023 when the dynamic was broken.
Fuel prices depend on many factors, such as the specific fuel price (independent of the oil price), the market volatility of crude oil, taxes, the cost of raw materials and logistics and gross margins.
With these levels, the price of 95 unleaded petrol in Spain remains below the EU average of 1.643 euros per litre and below the Eurozone average of 1.695 euros. In the case of diesel, the price in Spain is also lower than the EU average of 1.527 euros and the Eurozone average of 1.551 euros.
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