The cut in excise duties on fuel is officially operational, based on what was approved in the evening meeting of March 18, but the real effects on prices at the pump are only starting to be seen today, and not throughout Italy.
Immediately after the publication of the fuel decree, petrol and diesel continued to run, fueling controversy and triggering controls. According to monitoring data from the Ministry of Business, diesel reached 2.125 euros per litre, while petrol stood at 1.89 euros per litre, both up compared to the previous day.
Petrol prices falling but with delay
Reports came from many quarters of distributors who had not yet adjusted their prices. “I am receiving reports from all over Italy of people who, let’s say, are a little late,” said Deputy Prime Minister Matteo Salvini, blaming not the “petrol stations who are the last link and have a margin of 2-3 cents per litre” but “some company which is not as quick in lowering prices as it is in raising them”.
Mister Prezzi, the Guarantor for the surveillance of prices, on the indication of the Minister of Business Urso and the owner of the Economy Giorgetti, sent to the Guardia di Finanza the list of distributors who have not yet adjusted their prices “with an indication of the potential and most significant anomalies detected”.
Petrol, how much you really save
With the entry into force of the fuel decree, the expected discount is as follows:
- excise duty cut – 20 cents per litre
- VAT effect – 4.4 cents;
- total reduction – 24.4 cents per litre.
In percentage terms:
- savings on petrol – 13.4%;
- savings on diesel -12%.
This should bring the price of petrol to around 1.65 euros per liter and diesel to just under 1.9 euros.
Because prices don’t drop right away
The phenomenon of delays in price declines is not new and in the jargon of economists is known as the “missile and feather effect”. In summary: prices rise quickly (like a missile) when oil rises, but fall slowly (like a feather) when costs fall.
The reasons are different:
- distributors sell purchased fuel at higher prices;
- the final price includes excise duties, VAT, logistics and operating costs;
- traders tend not to anticipate declines without widespread market adjustment.
This is not automatically illegal speculation, but market dynamics. The problem of speculation emerges only, possibly, in the presence of anti-competitive agreements or the desire to keep prices high indefinitely: facts that must be demonstrated.
Fuels, what happens next
The excise duty cut will last 20 days, expiring on April 7. The provision is worth a total of over 500 million euros, including:
- 417.4 million for fuel cuts;
- 100 million for the road haulage tax credit;
- 17.4 million for the fishing sector.
At the end of the 20th day, the problem will inevitably arise again. The hope of the Meloni Government is that in the meantime the situation in the Middle East will normalize or, at least, that it will lighten up, restoring oxygen to the oil supply chain.
It should be specified that high oil prices do not only translate into higher prices for motorists. The entire economy is the one who loses out, with industries seeing costs increase and revenues shrink, with the banking system responding to the suffering of businesses by in turn suffering and with the price of goods inevitably rising due to higher production and transport costs.
