A fresh rise in wholesale fuel prices is eroding the impact of measures introduced by Greece’s government to ease costs for motorists, highlighting the limits of domestic subsidies when global oil markets are moving sharply higher.
The government announced a package of fuel-price interventions two weeks ago, working with the country’s refiners to lower pump prices. But international oil prices rose so quickly that much of the discount was effectively wiped out before consumers could feel the benefit.
Households and businesses are still paying more at filling stations, and a new diesel subsidy announced by Prime Minister Kyriakos Mitsotakis risks meeting the same fate if global prices continue to climb.
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Mr. Mitsotakis said the state would fund a reduction of €0.10 a liter in the price of automotive diesel throughout August. Combined with an existing €0.05-a-liter discount financed by refiners, the total reduction is intended to reach €0.15 a liter.
Market data, however, show that diesel prices have already risen by more than that amount.
The nationwide average price of automotive diesel increased to €1.998 a liter on July 23 from €1.823 on July 10, a gain of €0.175 a liter in less than two weeks. That increase exceeds the full value of the government’s latest intervention.
Even if the entire €0.15 discount were passed through to consumers, diesel would theoretically cost about €1.848 a liter. That would still be roughly €0.025 above its July 10 level.
The figures suggest that the subsidy won’t restore prices to where they stood before the latest energy-market turmoil, despite the cost to the public budget.
The sharp increase in refinery-gate prices helps explain why the relief has failed to reach consumers.
The wholesale price of automotive biodiesel sold by Helleniq Energy, one of Greece’s two major refining groups, rose to €1,488.417 per cubic meter on July 24 from €1,353.522 on July 11. At Motor Oil Hellas, the corresponding price rose to €1,486.820 from €1,352.211 per cubic meter.
That represents an increase of about €135 per cubic meter before value-added tax, equivalent to roughly €0.135 a liter before tax and nearly €0.167 a liter after VAT.
In effect, almost the entire €0.15 diesel discount has already been absorbed by the increase in refinery prices.
A further rise in wholesale prices on July 24 also suggests that some of the latest increase has yet to move through the supply chain to retail stations, raising the prospect of additional increases at the pump.
The picture is similar, though less severe, for gasoline.
The average price of regular unleaded gasoline rose to €1.996 a liter on July 23 from €1.972 on July 10, despite a €0.10-a-liter reduction financed by refiners. Drivers were therefore paying €0.024 more a liter even after the discount was introduced.
The government has focused its latest intervention on diesel because rising diesel prices affect more than private motorists. Diesel is widely used in freight transport, manufacturing, agriculture and logistics, meaning higher prices can feed through to the broader economy and eventually to consumer inflation.
The key question is whether the August subsidy can hold retail prices down if international oil prices continue to rise and those increases are once again passed through to Greek refiners and filling stations.
The experience of the past two weeks suggests that the government is trying to offset a moving target.
