Historic shift in EU fuel landscape: diesel now more expensive nearly everywhere

As fuel prices rise, it represents an increasing part of your fleet’s TCO. Which means fuel is more crucial than ever for optimising your fleet management. The first thing you need is good data: How much do petrol and diesel cost? How do prices differ – per country and over time? Here are some answers.

In its Weekly Oil Bulletin, the European Commission provides an overview per EU member state of the average prices for diesel and petrol (Euro Super-95) and the tax share of the final price. The latest bulletin, from 11 April, details the situation a week previously, on 4 April. Prices have obviously evolved since then, but the snapshot tells us something about the fuel landscape across the EU. Let’s have a look. 

Cross-border refueling

First, diesel.

• Five countries had average pump prices exceeding €2 per litre. Diesel was most expensive in Sweden (€2.44), followed by Finland (€2.25), Germany (€2.06), the Netherlands (€2.04) and Belgium (€2.02). 
• About half of the 27 member states – 13 in total – had diesel priced between €1.75 and €2.00. Seven are in western Europe (Ireland, Denmark, Luxembourg, France, Portugal, Italy and Austria), six in the east or south (Estonia, Latvia, Lithuania, Czech Republic, Croatia, Greece). 
• The six of the seven countries one price category lower (€1.50-€1.75) are in the east or south: Poland, Slovakia, Slovenia, Romania, Bulgaria, Cyprus – the exception being Spain.
• Which leaves just two countries in the lowest category (<€1.50): Malta and Hungary. 

It is not uncommon for low- and high-price countries to be neighbours, which of course creates flows of drivers filling up across the border. Portuguese ones going to Spain, Austrians driving to Hungary and Germans filling up in Poland.

Petrol prices follow a similar pattern: more expensive in the many of the same countries where diesel is expensive, and vice versa. With some notable exceptions.

• Petrol exceeds €2 per litre in four of the five countries where diesel is most expensive. Minus Belgium. Plus two more. It’s most expensive in Finland (€2.15), followed by the Netherlands (€2.11), Denmark (€2.09), Germany and Greece (both €2.06), and finally Sweden (€2.03). 
• Next category down (€1.75-€2.00) consists of nine countries, five of which are in the west (Ireland, Belgium, France, Italy and Portugal), four in the east (Czech Republic, Slovakia, Latvia and Estonia).
• The cheapest but one category (€1.50-€1.75) is made up of three western countries (Luxembourg, Austria and Spain, and four eastern ones (Lithuania, Slovenia, Croatia and Romania). 
• If you want Europe’s cheapest diesel, go to Hungary (€1.28). Runners-up are Malta, Poland, Cyprus and Bulgaria. 

Fuel prices depend on many variables, but the single most important contributor to the price at the pump are the various taxes that each country slaps on top of the actual cost. These taxes go a long way in explaining the size and persistence of the price differentials between countries (and between petrol and diesel), but they too are subject to change – especially now: many countries are temporarily reducing their taxes on fuel to offer their citizens some relief from the rising prices. In the Weekly Oil Bulletin, the European Commission also tracks their share of the total price per country. 

Usual suspects

• In seven countries, taxes represent 50% or more of the price of petrol at the pump. These include some likely suspects (Denmark, Sweden, Finland and Greece), but also countries that don’t show up in the top price category (France, Portugal and Malta – at 56%, its tax take of the petrol price is the highest in the whole EU). 
• No less than fourteen countries fall within the category from 45% up to 50% when it comes to taxing petrol: Estonia, Latvia and Lithuania; the Netherlands, Germany and Luxembourg; Ireland and Spain; the Czech Republic and Slovakia; Austria and Slovenia; Italy and Croatia. 
• Five countries charge between 40% and 45%: four in the east and south (Hungary, Romania, Bulgaria and Cyprus) and one in the west: Belgium.
• Poland charges the EU’s lowest tax on petrol: 31%.

Lower taxes were once used as an instrument to promote the use of diesel. In many countries, that tax differential continues to exist. The widest discrepancy is in Sweden, where diesel is taxed 13 percentage points (pp) less than petrol. In second place is Greece, where it’s 12 pp. 

In most countries, the difference is 4 to 8 pp in favour of diesel. Slovenia (44% vs 46% on petrol) and Malta (54% vs 56% on petrol) come closest to eliminating the advantage. Malta, by the way, charges double the rate in diesel tax as does Poland, which has the EU’s lowest rate.

Nevertheless, lower taxes no longer means cheaper diesel. For the first time in living memory, diesel is now more expensive than petrol in most EU countries, although not necessarily by much. 

On 4 April, the average national price of diesel was higher than that of petrol in 17 EU member countries.

• The difference was less than 10 eurocents in 7 countries (Bulgaria, Luxembourg, Spain, Slovenia, France, Ireland and Lithuania),
• from 10 to 20 eurocents in six countries (Finland, Czech Republic, Hungary, Romania, Poland and Croatia) and
• higher in three: Belgium, Cyprus and most of all in Sweden, where a litre of diesel on average cost 41 eurocents more than a litre of petrol. 

In Italy and Germany, the price of both fuels was in perfect balance. In the other eight member states, diesel was still cheaper, although again, often not by much.

• The advantage was less than 10 eurocents in Latvia, Estonia, Slovakia, Portugal and the Netherlands.
• It was greatest in Greece  (17 eurocents), with Denmark and Malta also showing double-digit differences.

Demand destruction

High diesel prices are pushing up the prices of production and transportation, which is pushing up costs for corporates, and will likely lead to higher prices for end products. In fact, diesel prices are so high that they’re beginning to lead to what economists call “demand destruction”: some fishing vessels are at the tipping point where the trip will likely cost more than the catch it will bring in, for example. 

High diesel prices are the result of an extremely tight market. Global stocks of diesel and other so-called 'middle distillates' are at their lowest since the 2008 financial crisis. This is due to refinery shutdowns at the start of the pandemic and the renewed rise in demand, by industry, for heating and for transportation. Of course, the Ukraine war and the subsequent tensions over energy supplies with Russia aren’t helping. At more than 750,000 barrels a day – about half Europe's total demand – Russia is Europe’s largest supplier of diesel. 

Germany relies on Russia for about 30% of its diesel, France about 25%, the UK about 18%. Any shortfall will have to be made up by sourcing diesel elsewhere. That will be a problem, and not just because of the tight market. The Middle East has a large diesel surplus, but this doesn’t meet the EU’s strict pollution standards. Other possible replacements, including from the U.S., will take time, which means the high diesel price is likely to persist for a while yet.