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Advancing speculation on fuel prices, Italian government imposes display of national average prices at gas stations

To limit fuel price increases at gas stations, the government of Italy imposes managers to display national average prices in order to improve transparency. The government considers recent price hikes are due to speculation.

Gas station
© IADE-Michoko

With prices on average close to 2 euros (2.15 dollars) per liter, and in some places up to 2.5 euros, consumers in Italy need to pay for one of the most expensive fuel compared with the cost of life among the Euro area. Moreover, gasoline prices grew about 10 percent during the first week of January.

And in an attempt to limit inflation on energy price, the Italian council of ministers approved on January 10 a decree that will impose more transparency to gas station managers. They will need to clearly display national average price of fuel to consumers next to the price they charge, or else will face a penalty. Gas station managers may face a suspension of activity from 7 to 90 days in case of recidivism.

To do so, average prices of fuel across the 55,000 gas stations of the country will now be monitored daily instead of weekly by the ministry of Entreprises and Made in Italy.

With new rules on transparency, Giorgia Melloni’s government aims at curbing the fuel price hikes for Italians. The prime minister along with far-right ally party Lega Nord are convinced that the most recent price increases are due to speculation from fuel distributors. But the analysis isn’t shared by all in the government.

Forza Italy, a minority part of the conservative coalition government which doesn’t manage the ministry of Economy and Finance nor the ministry of Enterprise, considers the increases are due to the changes in the excise duty. In fact, the government decided to stop the temporary cut in excise duty, implemented since March last year, for 2023 as it cost about 1 billion euros a month for the country. The excise duty then rose 18 cents per liter on January 1.

For Gianluca Di Ascenzo, president of Codacons, a coordination of consumer rights associations, the end of the temporary cut cannot explain all the increases and claims there is speculation among distributors. He also wants authorities to verify whether there is price agreement between operators.

The President of the Competition and Market Authority, Roberto Rustichelli, wrote to the Guardia di Finanza in order to get the documentation related to controls carried out on fuel prices so that they can study whether there are unfair commercial practices and violations of market competition rules.

The Guardia di Finanza, Italian law enforcement under the ministry of Finance, starting March 2022 implemented a control on price charged by fuel retailers. During 2022, 5,200 inspections were carried out at gas stations resulting in 2,800 violations of “price discipline,” according to documents published Tuesday. Almost 2,100 of them were related to the failure to notify authorities about their prices; another 700 were due to prices not displayed correctly or because fuel was charged higher than the price displayed.

The government declared antitrust and price surveillance will be reinforced.

Gas station manager, the “weakest link in the fuel supply chain”

Nevertheless, official data suggest that overall gasoline prices grew less than the excise duty increase.

According to the ministry of Environment and Energy Security, gasoline price of euro-super 95 grew 10 percent to 1,812 euros and automotive gas oil grew 9 percent to 1,868 euros between January 1 and 8.

And according to the ministry of Entreprises and Made in Italy, standard gasoline costs 11 cents more on average nationwide, accounting for a 6 percent increase from 1.773 euros to 1.881 euros, between the average December prices and January 10. A premium diesel oil like Excellium Diesel grew 29 cents, a 16 percent increase, from 1.610 euros to 1.874 euros.

Meanwhile, brent crude oil on December 30th was almost at its highest of the month at 85.92 dollars and dropped to 81.84 dollars on January 4 (-4.7 percent).

For Giuseppe Sperduto, president of the FAIB, the Italian federation of gas stations, the government position is “self-contradictory” considering official data certify prices at the pump are in line with the raise of the excise duty. He criticizes another weight added on the shoulders of small business owners who are “the weakest link in the fuel supply chain.” Prices applied at gas stations are determined by oil companies and retailers earn a fixed amount of what they sell regardless of price, on average 3.5 cents gross per liter, according to Mr Sperduto. The more expensive fuel is, the less gas station managers earn as people buy less, he argues.

A further government decree will further determine price caps of fuel on Italian highways. During their meeting, the council of ministers also agreed to renew the 200 euro-voucher dedicated to fuel expenses for employees until at least March 2023.

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