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fuel.  "War" in the market

fuel. “War” in the market

Written by Daniela Soares Ferreira and Sonia Perez Pinto

Fuel prices keep rising in Portugal and no one wants to be blamed. The news is not encouraging. As of this week, the price of gasoline has risen again by one cent, marking the eighth consecutive week of increases. The price of diesel should remain unchanged. It is true that the varnish cracked again this week after the Minister of Economy revealed that “there was no decision by the government this year, or in previous years, to increase taxes on fuel”. Pedro Sisa Vieira threw hot potatoes to the environment ministry but emphasized that “fuel taxes have not changed”.

He added, “It is true that the carbon tax on petroleum products is increasing as a result of market prices, but there was no decision by the government this year, or in previous years, to increase taxes on fuel.”

After transferring responsibilities to another ministry, Matos Fernandez ensured that the government proposed a decree-law that would allow for action on fuel sales margins. The goal, guaranteed by Matos Fernandez, is to avoid “questionable highs” so that consumers can feel lower prices. In other words, the government will then set a maximum margin for fuel sales by decree, “to ensure that excessive spikes do not occur.”

Prior to the ministers’ statements, the national energy sector had already confirmed that the rise in fuel prices, in a maximum period of two years, was due more to the increase in tax rates and gross profit margins than to the increase in fuel prices. Tax collection.

In the study “Analysis of the Evolution of Fuel Prices in Portugal”, the entity overseeing the fuel sector conducted an analysis of the evolution of prices and had no doubt that “the average prices offered for sale to the public are a maximum of two. years, for all types of fuel. This increase “is justified by an increase Prices before taxes and gross margins are more than tax increases.”

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The study also shows that during the pandemic’s critical months, average retail prices fell “at a significantly lower pace than the reference price declines.” Thus, in 2020, supplier margins have reached their maximum for the period under review. All in all: Gasoline, 36.8 cents a liter, on March 23. Diesel fuel is 29.3 cents a liter on March 16.

According to ENSE, on June 30 of this year, the margin calculated on gasoline was 0.069 euros higher than the average margin exercised in 2019 (or +36.62%). In the case of diesel, the margin on the last day of June was €0.01 higher than the 2019 average (or +5.08%).

diverting attention

The National Fuel Merchants Association (Anarec) was not satisfied with the remarks, which accused the government of distracting from the “real cause” of the fuel price hike. “Although it is still not known how this legislation will affect the activity of fuel sellers,” Anarec says “cannot help but express astonishment and surprise at the content of the data in question which is only intended to focus on commercial margins why high fuel prices distract consumers from The real reason for the high price ”, said the Chairman of the Board of Directors of the Federation, Francisco Albuquerque.

The association also clarifies that in our country, the price of fuel is determined based on factors that reflect a tax burden within 60%, that is, for each euro fed, 0.60 euro corresponds to taxes and fees. He accuses him: “State coffers have, of course, benefited from higher prices because, of necessity, they increase the taxes associated with them, as is the case for ISPs and the value-added tax.”

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Tax burden with weight

But let’s move on to the numbers. Supplying in Portugal is more expensive, ranking first in the country at the European level. According to the EU’s weekly fuel bulletin, Portugal has had a regular presence in the top countries with the most expensive petrol and diesel across Europe.

Henrique Tome, analyst at XTB, Ao i explained that “the increases in fuel prices in Portugal are linked to higher oil prices. As for the record barrel in Europe, Brent crude has been rising for three consecutive months.”

However, Anaric noted that “fuel sellers, who operate filling stations where the consumer fills their car, have no influence (and no vote on the matter) in the rise or fall of fuel prices,” adding that they are the last link in the fuel reselling chain.

We are limited to charging the prices that the oil companies set for us. Entrepreneurs with gas stations do not earn more or less from higher prices, because our profit rate is fixed and focused on the liter sold. With the increase in prices, some consumers are offering less, which actually reduces our profits”, emphasized i.

But the justification is different on the part of the Portuguese Association of Oil Companies (Petro). He explained that the increase in fuel prices “is one of the most repeated statements in the media, which society in general considers a reality, and in fact it does not correspond to the truth.”

The truth is that the high price of fuel is closely related to the high tax burden that causes it to rise to very high levels. Henrique Tomé has no doubts: «In fact, the tax burden on fuel in Portugal is very high compared to other countries. More than half of the fuel prices paid by consumers are taxes.”

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An opinion shared by Ricardo Márquez: “When doing the calculations for the price of gasoline and diesel on world markets, in European markets, which are traded by large companies, it is easy to see that more than 50% of the price we are We pay taxes.” He explains what happened: “When prices fell a few years ago, governments raised taxes successively because the public did not pay attention, as the increase in taxes was offset by lower world prices. The problem is that now, when the price rises to the levels it was a few years ago, we are left with fuel much higher than the levels we were at a few years ago. Oil is not even at $80 and was at $140. Gasoline was not what it is now. All this difference is imposed.”

Is that, recently, the Portuguese pay more than 50% in taxes on supply. Apetro does the calculations: “In the week beginning June 21, taxes made up about 60% of PMVP on gasoline and 55% on diesel.”