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Date Published: 07/07/2022
ARCHIVED - Spanish filling stations pocket part of government fuel discount
Low-cost service stations in Spain have hiked up their prices the most in recent months
When the Spanish government implemented a 20-cent per litre fuel subsidy on April 1, drivers across the country were anticipating a long-awaited price cut in petrol and diesel as costs have continued to break all records for months. Sadly, this measure has proved to be a bit of a flop and fuel prices are spiralling out of control, with the likelihood that petrol will exceed 3 euros per litre before the summer is out.
Now, a study of some 11,000 service stations across Spain indicates that the companies may be doing better than motorists from the fuel discount, since many are pocketing between 3 and 7 cents more on every litre since the government discount was implemented.
However, this doesn’t point to excessive greed on the behalf of service stations, according to the the Esade Center for Economic Policy, but rather a disconnect between the discount offered to motorists and the aid filling stations are supposed to receive from the government as compensation.
What can’t be ignored is that filling stations have almost unanimously increased their prices to a level that “can’t be explained” by how the cost of petroleum products and the exchange rate between the euro and the dollar have evolved in recent months. What’s more, the report indicates that the ‘low cost’ service stations have actually hiked up the price of petrol and diesel far more than big players like Repsol, Cepsa and BP.
The research suggests that the reason for the difference lies in the aid advance system implemented by the Spanish Treasury. The 20-cent fuel discount is designed in such a way that filling stations have to take the initial hit on the reduction and are reimbursed a month later. The authors of the study figure that this system is smothering independent service stations and those with lower prices, forcing them to inflate the cost per litre to ensure liquidity.
The system won’t have impacted the bigger companies as much, as they have enough cash flow to offer the discount without it impacting their profitability.
The Spanish government has now extended the fuel discount until the end of the year, but it remains to be seen if this will have any impact on lowering petrol and diesel costs overall.
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