Fuel prices in Spain: savings of up to 30 cents per litre

Since the conflict in Iran began, energy and fuel prices have risen sharply across much of the world. To soften the blow for households and businesses alike, many countries have introduced mitigating measures, but neighbouring Spain has gone further than most.

Although it was among the countries slowest to respond to rising prices, Spain this week unveiled one of the most wide-ranging packages to tackle the increases, offering savings of up to 30 cents per litre.

To deliver this substantial cut, Spain’s Council of Ministers approved a plan worth more than €5 billion, in force until 30 June. One of the key measures among the 80 announced by Pedro Sánchez’s government is a reduction in VAT on all forms of energy - fuels, natural gas and electricity - from 21% to 10%.

The sectors most exposed to the crisis - hauliers, farmers and fishers - will also receive a further 20-cent-per-litre discount on commercial diesel.

Other taxes have been reduced or suspended, including a special levy on hydrocarbons. The Spanish government’s package also covers taxes on electricity generation and consumption, with an expected 13% reduction in electricity bills.

What are fuel prices in Spain?

While fuel prices in Spain were normally already 15–20 cents cheaper per litre than in Portugal, the new measures have widened the gap considerably. Since they were introduced last weekend, the average price of standard diesel has fallen by 17 cents per litre to €1.772/l, while petrol has dropped by 21 cents per litre to €1.579/l.

Compare the average fuel prices in Portugal and Spain yesterday, 24 March:

Looking at average fuel prices in both countries, filling a 50-litre tank in Spain provides a direct saving of more than €17 on petrol and more than €14 on diesel compared with Portugal.

Portugal also offers a “tax discount”

Spain’s “tax discount” is substantial, but Portugal also uses this mechanism, applying it to ISP (Tax on Petroleum and Energy Products) and VAT. Since the start of the conflict, the government has announced a strengthening of this exceptional discount, which is cumulative in relation to the reference price recorded on 6 March. However, the total amount is far lower than in Spain: 4.7 cents per litre for standard petrol and 9.3 cents per litre for standard diesel.

In Portugal, from the beginning of the conflict until last Monday (23 March), standard diesel had already accumulated an increase of 41.1 cents per litre, while standard petrol had risen by 21.7 cents. In Spain, including the latest measures, the corresponding figures are 33.3 cents per litre and 9.7 cents.

In addition, the government announced an exceptional scheme for commercial diesel, providing an extra reimbursement of 10 cents per litre, up to a maximum of 15,000 litres per vehicle, for three months. The government also announced that support for the social gas cylinder will rise to €25, likewise for a three-month period.

What other European countries are doing

Portugal and Spain are not the only countries introducing measures to mitigate higher fuel prices. Germany, for instance, plans to ban price rises more than once a day, with prices set at midday, while continuing its boycott of Russian gas.

In France, oil company TotalEnergies has taken the lead by voluntarily capping prices at its filling stations. Italy has chosen to use excess VAT revenue to compensate consumers, while also announcing penalties for companies that inflate profit margins during the crisis.

Outside the European Union, the United Kingdom has introduced two more significant measures: freezing electricity and gas bills until the end of June - an average saving of £117 per household, around €135 at the current exchange rate - and a fund of more than £53 million (€61 million) for households reliant on heating oil.

Outside Europe: more drastic measures

Energy shortages are pushing several Asian nations towards actions that would have seemed unthinkable until recently. In Sri Lanka, the public sector closes every Wednesday and fuel has been rationed: cars are entitled to only 15 litres per fill-up, while motorcycles can receive just five litres. Myanmar has adopted a different, but equally striking, response: private vehicles may only drive on alternate days, according to their registration number.