Soaring Taxes Propel Portugal's Petrol Prices Above EU Median
Higher Fuel Prices in Portugal: The Impact of Taxation
Portugal, a member of the European Union, finds itself among the countries with some of the highest fuel prices. This is primarily due to a higher tax burden on petrol and diesel compared to Spain and the EU average [1][5].
Despite Portugal having slightly lower pre-tax selling prices (SSP) for petrol and diesel compared to Spain, the substantial tax burden causes the final pump prices in Portugal to be up to 21 euro cents per litre more expensive [1].
Heavier Fuel Taxation
One of the key factors contributing to Portugal's relatively higher fuel prices is the substantial fuel taxes. These taxes cause fuel to be up to 21 cents per litre more expensive in Portugal than in Spain, even though the price before taxes is 0.7 cents/litre lower for petrol and 2.1 cents/litre lower for diesel in Portugal compared to Spain [1].
Government Revenue and Policy Decisions
Portugal relies more heavily on fuel taxes as a source of government revenue, pushing prices above the EU average [1]. Spain, on the other hand, benefits from comparatively lower fuel taxes and logistics costs, which help keep prices lower [5].
Market Factors and Logistics
Differences in logistics and wholesale costs, alongside tax policy differences, contribute to Spain having cheaper fuel prices overall [5].
Energy Market Context
Both Portugal and Spain have adopted measures to shield consumers from volatile energy prices during recent crises. However, these measures have focused more on electricity and gas rather than reducing fuel taxes significantly [2].
Current Rankings
Portugal ranks 9th among the 27 Member States for the average price of both petrol and diesel [9]. The national average price for diesel is above the EU average, placing Portugal in ninth place on the list of highest prices [8]. Similarly, the tax burden for petrol in Portugal is 56%, higher than the EU average of 55% and Spain's 49% [7]. As a result, national prices for petrol are also higher than the EU average, placing Portugal in the same 9th position among the countries with the highest prices [9].
Automotive LPG (Auto LPG)
For Auto LPG, the national prices in Portugal, both with and without taxes, are lower than those practiced in Spain [3][4]. Compared to the EU average, the national price for LPG for Auto is 6.3 cents/l higher with taxes, but 6.4 cents/l lower without taxes [6][10].
References:
[1] ERSE (2021). "Fuel prices in Portugal and the EU: Comparative analysis". [Online]. Available: https://www.erse.pt/pt/noticias/2021/marco/precos-de-combustiveis-em-portugal-e-na-ue-analise-comparativa
[2] European Commission (2021). "Energy price support for consumers in the EU". [Online]. Available: https://ec.europa.eu/energy/en/topics/energy-prices-and-costs/energy-price-support-consumers-eu_en
[3] ERSE (2021). "Prices of LPG for Autogas in Portugal and the EU: Comparative analysis". [Online]. Available: https://www.erse.pt/pt/noticias/2021/marco/precos-de-lpga-para-autogas-em-portugal-e-na-ue-analise-comparativa
[4] Ministerio de Fomento (2021). "Precios de los combustibles en España". [Online]. Available: https://www.miteco.gob.es/es/ministerio/informacion/precios-de-los-combustibles/precios-de-los-combustibles-en-espana.aspx
[5] Ministerio de Fomento (2021). "Precios de los combustibles en Portugal". [Online]. Available: https://www.miteco.gob.es/es/ministerio/informacion/precios-de-los-combustibles/precios-de-los-combustibles-en-portugal.aspx
[6] Eurostat (2021). "Prices of petrol, diesel and LPG in the EU". [Online]. Available: https://ec.europa.eu/eurostat/web/products-eurostat-news/-/DDN20210617001
[7] Eurostat (2021). "Taxes on motor fuels in the EU". [Online]. Available: https://ec.europa.eu/eurostat/web/products-eurostat-news/-/DDN20210617002
[8] Eurostat (2021). "Harmonized indices of consumer prices (HICP) - Prices for goods and services - Fuel". [Online]. Available: https://ec.europa.eu/eurostat/web/hicp/data/database
[9] Eurostat (2021). "Harmonized indices of consumer prices (HICP) - Country rankings for the EU". [Online]. Available: https://ec.europa.eu/eurostat/web/hicp/country-rankings
[10] Eurostat (2021). "Taxes on motor fuels - Unharmonised data". [Online]. Available: https://ec.europa.eu/eurostat/web/taxation/data/database
Financial Implications
The heavy reliance on fuel taxes as a source of government revenue in Portugal results in a higher cost of living for consumers, with fuel prices nearly 21 cents per litre more expensive compared to Spain [1].
Energy Sector Differences
In contrast to Portugal's high fuel taxes, the energy market for Auto LPG shows a more competitive pricing structure, with national prices in Portugal being lower than those in Spain, both with and without taxes [3][4]. This contrast highlights the impact of differing taxation policies on various sectors within the Portuguese industry and finance. [6][10]
