Petrol prices jump 5.6% in Spain as VAT reduction disappears
Despite a new discount introduced on July 1, fuel costs have shot up right across Spain
Drivers in Spain had got pretty used to watching fuel prices fall week after week in the run-up to summer, so this latest jump has caused a bit of a sting. Petrol prices have shot up by almost 5.6% despite a 15 cent discount the government brought in for July, after VAT on fuel returned to its standard rate of 21%.
The increase brings an end to five consecutive weeks of falling prices, a run that had pushed diesel down by as much as 11% and sent petrol to its lowest levels of the year.
According to the European Union's Oil Bulletin, published this Thursday with data up to July 6, the average price of a litre of diesel now sits at €1.535, up 2.13% on last week and back to levels last seen a fortnight ago. Petrol climbed even more sharply, rising 5.56% to €1.517 a litre, which puts it roughly back where it stood a month ago.
The government approved the VAT change at an extraordinary Council of Ministers meeting on June 29, brought in to deal with the fallout from the war in Iran. The decree scrapped the reduced 10% VAT rate on fuel that had been in place since March as part of the first round of anti-crisis measures.
At the same meeting, ministers also approved a cut to the Special Tax on Hydrocarbons, which works out as a 15 cent reduction per litre in July, dropping to 10 cents in August and 5 cents in September.
Unfortunately, that discount hasn't been enough to offset the VAT increase, according to the Spanish Fuel Industry Association and the Spanish Confederation of Service Station Business Owners, both of which warned that drivers would still end up paying more overall.
Even so, prices remain well below the highs seen in the summer of 2022, when petrol reached €2.141 a litre and diesel hit €2.1.
Filling an average 55-litre tank now costs around €84.42 for diesel, which is €6.43 more than the same week last year. Petrol drivers are paying about €83.43 to fill up, an increase of €1.37 compared to 12 months ago.
Fuel prices don't move in a straight line with oil prices either. Rather, they're shaped by a mix of factors including individual pricing decisions, crude oil fluctuations, taxes, logistics costs and profit margins, and any changes in crude prices tend to take a while to filter through to the pump.
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