Minister allows reduction in excise duty on fuel if prices continue to rise

RIGA - If fuel prices continue to rise for a longer period of time, a reduction in excise duty on fuel could be considered, according to Economy Minister Viktors Valainis (Greens/Farmers).

In his opinion, this would be a more effective solution than setting fuel price caps, as has been done in some other countries, the politician told LETA, commenting on the situation in the fuel market.

According to the minister, introducing price caps would be an administratively complex and expensive solution, while reducing excise duty could have a similar effect and would be easier to implement. He added that such a measure would also allow for a clearer balance of the impact on the state budget, as part of the lost revenue could be offset by value-added tax revenue.

Valainis also announced that a meeting with fuel retailers is planned at the Ministry of Economics on Thursday to discuss pricing. He indicated that he expects retailers to provide explanations for price changes at gas stations.

Valainis believes that changes in fuel prices should also reflect fluctuations in the global oil market. He pointed out that prices can change very quickly, even within a single day. For example, while on Monday the price of oil exceeded USD 100 per barrel, but Tuesday morning it was already around USD 88.

To ensure that retailers can justify "every cent of the fuel price increase," "fairly strict checks" are being carried out, Valainis emphasized. The Competition Council is also monitoring the situation, assessing what is happening in the market to ensure that the price increase is economically justified.

Valainis expects retailers to explain why the fall in prices on the world market is not reflected as quickly in retail prices. He expressed concern that in practice, prices often rise rapidly when oil becomes more expensive on the global market, but do not fall as quickly when oil prices fall.

As reported, Hungary and Croatia have set fuel price caps in response to the sharp rise in oil prices on the global market caused by the conflict in the Middle East and supply disruptions.