Another rise in fuel prices is expected in Luxembourg

Luxembourg’s ministries have confirmed that further rises in retail fuel prices are inevitable due to developments on the global markets. Despite a slight fall in petrol prices over the weekend, prices at the country’s petrol stations remain at record levels, fuelled by rising diesel prices and the increase in the price of Brent crude to $109 per barrel. Relevant government departments emphasise that, due to the rapidly changing situation in the Middle East, it is currently impossible to make long-term forecasts regarding price trends.

In Luxembourg, the daily base price of fuel is calculated by the Ministry of the Economy on the basis of quotations from the independent pricing agency Argus. The European price quote ‘Gasoil diesel 10ppm German Rotterdam fob barge prompt’ is used to calculate the cost of diesel and fuel oil, whilst Eurobob quotes are used for petrol. The term ‘barge prompt’ refers to terms of trade whereby goods are loaded onto a vessel at the earliest opportunity, whilst the abbreviation ‘fob’ (free on board) indicates a sale excluding delivery costs. In addition, the euro-to-US dollar exchange rate remains a key factor influencing retail prices, as international settlements are conducted in US dollars.

The final price of fuel for consumers also includes 17 per cent VAT and fixed excise duties of €0.53 per litre of petrol and €0.42 per litre of diesel. Tax and excise duty rates in Luxembourg are deliberately kept lower than in neighbouring countries, as part of a deliberate policy to encourage ‘fuel tourism’ in order to boost government revenue. At the same time, a state subsidy of 0.05 euros per litre, approved during tripartite meetings, remains in force in the country until the end of the year. 

However, Lex Delles, Minister for the Economy and Energy, noted that the state’s ability to keep prices in check is limited. The current situation calls into question STATEC’s previous pessimistic scenario, which had predicted that the crisis would end in the autumn; as a result, another tripartite meeting is planned for October to review the macroeconomic forecasts.