The governing coalition has reached an agreement on further measures to curb rising fuel prices, a move that comes as consumers continue to feel the impact of geopolitical instability on energy costs. After lengthy negotiations extending into the night, coalition partners met Wednesday morning to finalize plans aimed at lowering prices at the pump.
Price-Dampening Tax Cut
One key component of the plan involves a tax cut designed to lower prices. The government has acknowledged that it benefits from higher fuel prices through tax revenue. “The common goal of the federal government is to return the additional revenue to the population,” officials stated. The relief will be proportional and budget-neutral, with an initial reduction of five cents per liter for both gasoline and diesel.
The tax cut was particularly championed by the People’s Party. “The state must not profit from the crisis. What financially burdens people and businesses should not lead to increased state revenue,” said Chancellor Christian Stocker. “We are lowering the mineral oil tax and creating the possibility of limiting margins along the entire value chain.”
Intervention in Profit Margins
The Social Democratic Party has consistently called for intervention in the profit margins of refineries, and that demand is now being addressed. “In the interest of price stability, margins along the fuel value chain should be able to be frozen by ordinance of the Federal Government,” according to a government statement. The aim is to limit extraordinary profits although ensuring supply security and maintaining economically viable conditions for businesses. “This creates quick relief,” said Vice Chancellor Andreas Babler following the cabinet meeting. “These interventions do not mean that no profits can be made anymore. But we are preventing a crisis from becoming a business model.” Babler cautioned, however, that “if international crude oil prices rise sharply, we will not be able to prevent that either.”
While the Neos party has historically been skeptical of price interventions, Foreign Minister Beate Meinl-Reisinger defended the measures, emphasizing their temporary nature. She similarly stressed the importance of maintaining supply security. “We are implementing measures that create supply security, dampen inflation and make us independent. With a mechanism that kicks in when necessary, we protect our economy and ensure that the dynamics of 2022 do not repeat themselves,” Meinl-Reisinger said. “We are not letting inflation run rampant. In the long term, we are working on reforms in the energy sector that will strengthen our resilience.” The government estimates these two measures will result in fuel savings of around ten cents per liter.
Measures Planned Through Year’s End
Both mechanisms are slated to accept effect by April 1, 2026, and will automatically expire on December 31, 2026. “With the ordinances based on them, the federal government should be able to react flexibly to the current situation, which is why these can only be issued for a month at a time. An extension is permissible,” the government statement reads. To be prepared for all eventualities in light of geopolitical uncertainty, both instruments can be suspended at any time if supply security is threatened. The package is scheduled to be approved at a special session of the National Council next Monday.
Fuel Prices Have Recently Declined
Recent data from the regulatory authority E-Control shows a slight decrease in fuel prices at the pump. On Monday, a liter of diesel cost an average of 1.988 euros nationwide, while super gasoline cost 1.785 euros. On Tuesday, diesel was priced at 1.964 euros per liter, and gasoline at 1.760 euros.
